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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Section 240.14a-11(c) or
Section 240.14a-12
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
_________________________________________________________________
(Name of Registrant as Specified in its Charter)
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
_________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
_________________________________________________________
2) Aggregate number of securities to which transaction
applies:
_________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: (1)
_________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________
1 Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
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filing by registration statement number, or the form or schedule
and the date of its filing,
1) Amount previously paid:
_________________________________________________________
2) Form, schedule, or Registration Statement no.:
_________________________________________________________
3) Filing party:
_________________________________________________________
4) Date filed:
_________________________________________________________
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Proxy for the T. Rowe Price Blue Chip Growth Fund, Inc., should
be inserted here.
PAGE 1
T. ROWE PRICE
_________________________________________________________________
T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore,
MD 21202
James S. Riepe
Managing Director
Dear Shareholder:
All of the T. Rowe Price mutual funds will hold shareholder
meetings in 1994 to elect directors, ratify the selection of
independent accountants, and approve amendments to a number of
investment policies.
The T. Rowe Price funds are not required to hold annual
meetings each year if the only items of business are to elect
directors or ratify accountants. In order to save fund expenses,
most of the funds have not held annual meetings for a number of
years. There are, however, conditions under which the funds must
solicit shareholder approval of directors, and one is to comply
with a requirement that a minimum number have been elected by
shareholders, not appointed by the funds' boards. Since the last
annual meetings of the T. Rowe Price funds, several directors
have retired and new directors have been added. In addition, a
number of directors will be retiring in the near future.
Given this situation, we believed it appropriate to hold
annual meetings for all the T. Rowe Price funds in 1994. At the
same time, we reviewed the investment policies of all of the
funds for consistency and to assure the portfolio managers have
the flexibility they need to manage your money in today's fast
changing financial markets. The changes being recommended, which
are explained in detail in the enclosed proxy material, do not
alter the funds' investment objectives or basic investment
programs. In the case of the T. Rowe Price Mid-Cap Growth Fund,
Inc., the wording in the investment objective has been changed to
clarify the investment approach and basic philosophy underlying
the fund's objective, which has essentially remained the same.
In many cases the proposals are common to several funds, so
we have combined certain proxy statements to save on fund
expenses. For those of you who own more than one of these funds,
the combined proxy may also save you the time of reading more
than one document before you vote and mail your ballots. The
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proposals which are specific to an individual fund are easily
identifiable on the Notice and in the proxy statement discussion.
If you own more than one fund, please note that each fund has a
separate card. You should vote and sign each one, then return
all of them to us in the enclosed postage-paid envelope.
Your early response will be appreciated and could save your
fund the substantial costs associated with a follow-up mailing.
We know we are asking you to review a rather formidable proxy
statement, but this approach represents the most efficient one
for your fund as well as for the other funds. Thank you for your
cooperation. If you have any questions, please call us at 1-800-
225-5132.
Sincerely,
James S. Riepe
Director, Mutual Funds Division
CUSIP#77954Q106/fund#093
CUSIP#779546100/fund#058
CUSIP#779556109/fund#064
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T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
Notice of Meeting of Shareholders
April 20, 1994
The Annual Meeting of Shareholders of the T. Rowe Price Blue
Chip Growth Fund, Inc. ("Blue Chip Growth Fund"), T. Rowe Price
Dividend Growth Fund, Inc. ("Dividend Growth Fund") and T. Rowe
Price Mid-Cap Growth Fund, Inc. ("Mid-Cap Growth Fund"), (each a
"Fund" and collectively the "Funds"), each a Maryland
corporation, will be held on Wednesday, April 20, 1994, at the
offices of the Funds, 100 East Pratt Street, Baltimore, Maryland
21202. The times for the Annual Meeting are 8:00 o'clock a.m.,
Eastern time, for the Mid-Cap Growth Fund and 9:30 o'clock a.m.,
Eastern time, for the Blue Chip Growth and Dividend Growth Funds.
The following matters will be acted upon at that time:
1. For the shareholders of each Fund: To elect directors
for the Fund in which you invest to serve until the
next annual meeting, if any, or until their successors
shall have been duly elected and qualified;
2. For the shareholders of each Fund:
A. To amend each Fund's fundamental policies to
increase its ability to engage in borrowing
transactions;
B. To amend each Fund's fundamental policies on
investing in commodities and futures contracts to
permit greater flexibility in futures trading;
C. To amend each Fund's fundamental policies to
increase its ability to engage in lending
transactions;
D. To change from a fundamental to an operating policy
each Fund's policy on purchasing securities on
margin;
CUSIP#77954Q106/fund#093
CUSIP#779546100/fund#058
CUSIP#779556109/fund#064
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3. For the shareholders of each Fund: To ratify or reject
the selection of the firm of Price Waterhouse as the
independent accountants for each Fund for the fiscal
year 1994;
4. For the shareholders of Mid-Cap Growth Fund only: To
amend the Fund's investment objective to delete income
as a secondary objective; and
5. To transact such other business as may properly come
before the meeting and any adjournments thereof.
LENORA V. HORNUNG
Secretary
March 10, 1994
100 East Pratt Street
Baltimore, Maryland 21202
_________________________________________________________________
YOUR VOTE IS IMPORTANT
Shareholders are urged to designate their choices on each of the
matters to be acted upon and to date, sign, and return the
enclosed proxy in the envelope provided, which requires no
postage if mailed in the United States. Your prompt return of
the proxy will help assure a quorum at the meeting and avoid the
additional Fund expense of further solicitation.
_________________________________________________________________
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T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
T. ROWE PRICE DIVIDEND GROWTH FUND, INC.
T. ROWE PRICE MID-CAP GROWTH FUND, INC.
Meeting of Shareholders--April 20, 1994
PROXY STATEMENT
This statement is furnished in connection with the
solicitation of proxies by the T. Rowe Price Blue Chip Growth
Fund, Inc. (the "Blue Chip Growth Fund"), the T. Rowe Price
Dividend Growth Fund, Inc. (the "Dividend Growth Fund"), and the
T. Rowe Price Mid-Cap Growth Fund, Inc. (the "Mid-Cap Growth
Fund") (each a "Fund" and collectively the "Funds"), each a
Maryland corporation, for use at the Annual Meeting of
Shareholders of each Fund to be held on April 20, 1994, and at
any adjournments thereof.
Shareholders may only vote on matters which concern the
Fund or Funds in which they hold shares. Shareholders are
entitled to one vote for each full share, and a proportionate
vote for each fractional share, of the Fund held as of the record
date. Under Maryland law, shares owned by two or more persons
(whether as joint tenants, co-fiduciaries, or otherwise) will be
voted as follows, unless a written instrument or court order
providing to the contrary has been filed with the Fund: (1) if
only one votes, that vote will bind all; (2) if more than one
votes, the vote of the majority will bind all; and (3) if more
than one votes and the vote is evenly divided, the vote will be
cast proportionately.
In order to hold the meeting, a majority of each Fund's
shares entitled to be voted must have been received by proxy or
be present at the meeting. In the event that a quorum is present
but sufficient votes in favor of one or more of the Proposals are
not received by the time scheduled for the meeting, the persons
named as proxies may propose one or more adjournments of the
meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of
the shares present in person or by proxy at the session of the
meeting adjourned. The persons named as proxies will vote in
favor of such adjournment if they determine that such adjournment
and additional solicitation is reasonable and in the interests of
each Fund's shareholders. The shareholders of each Fund vote
separately with respect to each Proposal.
The individuals named as proxies (or their substitutes) in
the enclosed proxy card (or cards if you own shares of more than
one Fund or have multiple accounts) will vote in accordance with
your directions as indicated thereon if your proxy is received
properly executed. You may direct the proxy holders to vote your
shares on a Proposal by checking the appropriate box "For" or
"Against," or instruct them not to vote those shares on the
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Proposal by checking the "Abstain" box. Alternatively, you may
simply sign, date and return your proxy card(s) with no specific
instructions as to the Proposals. If you properly execute your
proxy card and give no voting instructions with respect to a
Proposal, your shares will be voted for the Proposal. Any proxy
may be revoked at any time prior to its exercise by filing with
the Fund a written notice of revocation, by delivering a duly
executed proxy bearing a later date, or by attending the meeting
and voting in person.
Abstentions and "broker non-votes" (as defined below) are
counted for purposes of determining whether a quorum is present,
but do not represent votes cast with respect to any Proposal.
"Broker non-votes" are shares held by a broker or nominee for
which an executed proxy is received by the Fund, but are not
voted as to one or more Proposals because instructions have not
been received from the beneficial owners or persons entitled to
vote and the broker or nominee does not have discretionary voting
power.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE
MEETING IS SUFFICIENT TO APPROVE PROPOSAL 1 FOR EACH FUND. A
MAJORITY OF THE SHARES PRESENT IN PERSON OR BY PROXY AT THE
MEETING IS SUFFICIENT TO APPROVE PROPOSAL 3 FOR EACH FUND.
APPROVAL OF ALL REMAINING PROPOSALS OF EACH FUND REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF THE LESSER OF (A) 67% OF THE
SHARES PRESENT AT THE MEETING IN PERSON OR BY PROXY, OR (B) A
MAJORITY OF EACH FUND'S OUTSTANDING SHARES.
If the proposed amendments to each Fund's fundamental
investment policies are approved, they will become effective on
or about May 1, 1994. If any of the proposed amendments to each
Fund's fundamental investment policies are not approved, they
will remain unchanged.
Each Fund will pay a portion of the costs of the meeting,
including the solicitation of proxies, allocated on the basis of
the number of shareholder accounts of each Fund. Persons holding
shares as nominees will be reimbursed, upon request, for their
reasonable expenses in sending solicitation materials to the
principals of the accounts. In addition to the solicitation of
proxies by mail, directors, officers, and/or employees of each
Fund or of its investment manager, T. Rowe Price Associates, Inc.
("T. Rowe Price"), may solicit proxies in person or by telephone.
The approximate date on which this Proxy Statement and form
of proxy is first being mailed to shareholders of each Fund is
March 10, 1994.
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1. ELECTION OF DIRECTORS
The following table sets forth information concerning each
of the nominees for director indicating the particular Board(s)
on which the nominee has been asked to serve. Each nominee has
agreed to hold office until the next annual meeting (if any) or
his successor is duly elected and qualified. With the exception
of Ms. Merriman, each of the nominees is a member of the present
Board of Directors of the Fund and has served in that capacity
since originally elected. A shareholder using the enclosed proxy
form can vote for all or any of the nominees of the Board of
Directors or withhold his or her vote from all or any of such
nominees. If the proxy card is properly executed but unmarked,
it will be voted for all of the nominees. Should any nominee
become unable or unwilling to accept nomination or election, the
persons named in the proxy will exercise their voting power in
favor of such other person or persons as the Board of Directors
of the Fund may recommend. There are no family relationships
among these nominees.
The membership of the three Boards will not be identical
following election at the meeting. Specifically, certain
individuals who are interested persons of T. Rowe Price are being
elected to only one of the Funds. Shareholders are being asked
to elect the Board of Directors of their respective Fund only.
_________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Owned, Shares
Name, Address, Directly Beneficially
Date of Birth or Owned
of Nominee and Indirectly, Directly
Position with Principal as of as of
Fund Occupations(1) 1/31/94(2) 1/31/94
_________________________________________________________________
Leo C. Bailey Retired; Director of the Blue Chip
3396 S. Placita following T. Rowe Price Growth
Fabula Funds: Growth Stock, Fund:
Green Valley, AZ New Era, Science & Dividend
85614 Technology, Index Trust Growth
3/3/24 (since inception), Fund:
0Blue Chip Balanced (since inception), Mid-Cap
Growth Fund: OTC (since inception), Growth Fund:
Director since International, and
1993 Institutional International
0Dividend (since inception)
Growth Fund:
Director since
1992
0Mid-Cap Growth
Fund: Director
since 1992
PAGE 8
_________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Owned, Shares
Name, Address, Directly Beneficially
Date of Birth or Owned
of Nominee and Indirectly, Directly
Position with Principal as of as of
Fund Occupations(1) 1/31/94(2) 1/31/94
_________________________________________________________________
*Thomas H. Managing Director, T. Rowe Blue Chip
Broadus, Jr. Price Associates, Inc.; Growth Fund:
100 East Pratt Chairman of the Board,
Street T. Rowe Price Equity
Baltimore, MD Income Fund
21202
10/25/37
0Blue Chip
Growth Fund:
President and
member of
Executive
Committee since
1993
Donald W. Dick, Partner, Overseas Blue Chip
Jr. Partners, Inc., a Growth Fund:
375 Park Avenue financial investment firm; Dividend
Avenue formerly (6/65-3/89) Growth Fund:
Suite 3505 Director and Vice Mid-Cap
New York, NY President-Consumer Growth Fund:
10152 Products Division,
1/27/43 McCormick & Company, Inc.,
0Blue Chip international food processors;
Growth Fund: Director/Trustee, Waverly Press,
Director since Inc. and the following T. Rowe
1993 Price Funds/Trusts: Growth
0Dividend Growth Stock, Growth & Income,
Fund: Director New America Growth, Capital
since 1992 Appreciation, Balanced (since
0Mid-Cap Growth inception), OTC (since inception),
Fund: Director International, and Institutional
since 1992 International (since inception)
PAGE 9
_________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Owned, Shares
Name, Address, Directly Beneficially
Date of Birth or Owned
of Nominee and Indirectly, Directly
Position with Principal as of as of
Fund Occupations(1) 1/31/94(2) 1/31/94
_________________________________________________________________
David K. Fagin Chairman, Chief Executive Blue Chip
One Norwest Officer and Director, Growth Fund:
Center Golden Star Resources, Dividend
1700 Lincoln Ltd.; formerly (1986-7/91) Growth Fund:
Street President, Chief Operating Mid-Cap
Suite 1950 Officer and Director, Growth Fund:
Denver, CO Homestake Mining Company;
80203 Director/Trustee of the
4/9/38 following T. Rowe Price
0Blue Chip Funds/Trusts: New Horizons,
Growth Fund: New Era, Equity Income,
Director since Capital Appreciation,
1993 Balanced (since inception),
0Dividend Growth and OTC (since inception)
Fund: Director
since 1992
0Mid-Cap Growth
Fund: Director since
1992
*James A.C. Managing Director, T. Rowe Mid-Cap
Kennedy, III Price Associates, Inc. Growth Fund:
100 East Pratt
Street
Baltimore, MD
21202
8/17/53
0Mid-Cap Growth
Fund: President
and member of
Executive
Committee since
1992
PAGE 10
_________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Owned, Shares
Name, Address, Directly Beneficially
Date of Birth or Owned
of Nominee and Indirectly, Directly
Position with Principal as of as of
Fund Occupations(1) 1/31/94(2) 1/31/94
_________________________________________________________________
Addison Lanier Financial management; Blue Chip
441 Vine Street, President and Director, Growth Fund:
#2310 Thomas Emery's Sons, Inc. Dividend
Cincinnati, OH and Emery Group, Inc.; Growth Fund:
45202-2913 Director/Trustee, Scinet Mid-Cap
1/12/24 Development and Holdings, Growth Fund:
0Blue Chip Inc. and the following T. Rowe
Growth Fund: Price Funds/Trusts: New America
Director since Growth, Equity Income, Small-Cap
1993 Value, Balanced (since inception),
0Dividend Growth OTC (since inception), International,
Fund: Director and Institutional International
since 1992 (since inception)
0Mid-Cap Growth
Fund: Director since
1992
*John H. Laporte Managing Director, T. Rowe Mid-Cap
100 East Pratt Price Associates, Inc.; Growth Fund:
Street Chairman of the Board of
Baltimore, MD the following T. Rowe Price
21202 Funds: Science & Technology,
7/26/45 Small-Cap Value, and OTC
0Mid-Cap Growth (since inception); President
Fund: Initial and Director/Trustee of the
election following T. Rowe Price Fund/
Trust: New Horizons and
New America Growth
PAGE 11
_________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Owned, Shares
Name, Address, Directly Beneficially
Date of Birth or Owned
of Nominee and Indirectly, Directly
Position with Principal as of as of
Fund Occupations(1) 1/31/94(2) 1/31/94
_________________________________________________________________
John K. Major Chairman of the Board and Blue Chip
126 E. 26 Place President, KCMA Growth Fund:
Tulsa, OK Incorporated, Tulsa, Dividend
74114-2422 Oklahoma; Director/Trustee Growth Fund:
8/3/24 of the following Mid-Cap
0Blue Chip T. Rowe Price Funds/Trusts: Growth Fund:
Growth Fund: Growth Stock, New Horizons,
Director since New Era, Growth & Income,
1993 Capital Appreciation,
0Dividend Growth Science & Technology,
Fund: Director Balanced (since inception),
since 1992 and OTC (since inception)
0Mid-Cap Growth
Fund: Director since
1992
Hanne M. Retail business consultant; Blue Chip
Merriman formerly, President and Growth Fund:
655 15th Street Chief Operating Officer Dividend
Suite 300 (1991-92), Nan Duskin, Growth Fund:
Washington, Inc., a women's specialty Mid-Cap
D.C. 20005 store, Director (1984-90) Growth Fund:
11/16/41 and Chairman (1989-90)
0Blue Chip Federal Reserve Bank of
Growth Fund: Richmond, and President
Initial election and Chief Executive Officer
0Dividend Growth (1988-89), Honeybee, Inc.,
Fund: Initial a division of Spiegel, Inc.;
election Director, Central Illinois
0Mid-Cap Growth Public Service Company, CIPSCO
Fund: Initial Incorporated, The Rouse Company,
election State Farm Mutual Automobile
Insurance Company and USAir
Group, Inc.
PAGE 12
_________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Owned, Shares
Name, Address, Directly Beneficially
Date of Birth or Owned
of Nominee and Indirectly, Directly
Position with Principal as of as of
Fund Occupations(1) 1/31/94(2) 1/31/94
_________________________________________________________________
*James S. Riepe Managing Director, T. Rowe Blue Chip
100 East Pratt Price Associates, Inc.; Growth Fund:
Street President and Director, Dividend
Baltimore, MD T. Rowe Price Investment Growth Fund:
21202 Services, Inc.; Chairman Mid-Cap
6/25/43 of the Board, T. Rowe Growth Fund:
0Blue Chip Price Services, Inc.,
Growth Fund: T. Rowe Price Trust
Vice President Company, T. Rowe Price
and member of Retirement Plan Services,
Executive Inc. and the following
Committee since T. Rowe Price Funds:
1993 Growth & Income, Spectrum
0Dividend Growth (since inception), and
Fund: Vice Balanced (since inception);
President and Vice President of the following
member of T. Rowe Price Funds/Trusts:
Executive New Era, New America Growth,
Committee since Prime Reserve, International, and
1992 Institutional International
0Mid-Cap Growth (since inception); Vice President
Fund: Chairman and Director/Trustee of the 22
of the Board other T. Rowe Price Funds/Trusts;
and member of Director, T. Rowe Price Tax-Free
the Executive Insured Intermediate Bond Fund,
Committee since Inc. (since inception) and Rhone-Poulenc
1992 Rorer, Inc.
PAGE 13
_________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Owned, Shares
Name, Address, Directly Beneficially
Date of Birth or Owned
of Nominee and Indirectly, Directly
Position with Principal as of as of
Fund Occupations(1) 1/31/94(2) 1/31/94
_________________________________________________________________
*M. David Testa Managing Director, T. Rowe Blue Chip
100 East Pratt Price Associates, Inc.; Growth Fund:
Street Chairman of the Board, Dividend
Baltimore, MD Rowe Price-Fleming Growth Fund:
21202 International, Inc. and
4/22/44 the following T. Rowe
0Blue Chip Price Funds: Growth Stock,
Growth Fund: International, and
Director and Institutional International
member of (since inception); Vice
Executive President and Director, T.
Committee Rowe Price Trust Company
since 1993 and T. Rowe Price Balanced
0Dividend Growth Fund, Inc. (since inception);
Fund: Director Vice President, T. Rowe
and member of Price Spectrum Fund, Inc.
Executive (since inception)
Committee since
1992
Hubert D. Vos President, Stonington Blue Chip
1231 State Capital Corporation, a Growth Fund:
Street private investment company; Dividend
Suite 210 Director/Trustee of the Growth Fund:
Santa Barbara, following T. Rowe Funds/ Mid-Cap
CA 93190-0409 Trusts: New Horizons, Growth Fund:
8/2/33 New Era, Equity Income,
0Blue Chip Capital Appreciation,
Growth Fund: Science & Technology,
Director since Small-Cap Value, Balanced
1993 (since inception), and
0Dividend Growth OTC (since inception)
Fund: Director
since 1992
0Mid-Cap Growth
Fund: Director since
1992
PAGE 14
_________________________________________________________________
Fund All Other
Shares Price
Beneficially Funds'
Owned, Shares
Name, Address, Directly Beneficially
Date of Birth or Owned
of Nominee and Indirectly, Directly
Position with Principal as of as of
Fund Occupations(1) 1/31/94(2) 1/31/94
_________________________________________________________________
Paul M. Wythes Founding General Partner, Blue Chip
755 Page Mill Sutter Hill Ventures, a Growth Fund:
Road venture capital limited Dividend
Suite A200 partnership providing Growth Fund:
Palo Alto, CA equity capital to young Mid-Cap
94304 high technology companies Growth Fund:
6/23/33 throughout the United States;
0Blue Chip Director/Trustee, Teltone
Growth Fund: Corporation, Interventional
Director since Technologies, Inc., Stuart Medical,
1993 Inc. and the following T. Rowe
0Dividend Growth Price Funds/Trusts: New Horizons,
Fund: Director Growth & Income, New America Growth,
since 1992 Science & Technology, Small-Cap Value,
0Mid-Cap Growth Index Trust (since inception), Balanced
Fund: Director (since inception), and OTC (since inception)
since 1992
*Nominees considered "interested persons" of Price Associates.
(1) Except as otherwise noted, each individual has held the
office indicated, or other offices in the same company, for
the last five years.
(2) In addition to the shares owned beneficially and of record
by each of the nominees, the amounts shown reflect the
proportionate interests of Messrs. Kennedy and Riepe in
_________ shares of the Fund which are owned by a wholly-
owned subsidiary of the Fund's investment manager T. Rowe
Price, and their interests in _________ shares owned by the
T. Rowe Price Associates, Inc. Profit Sharing Trust.
The directors of the Fund who are officers or employees of
T. Rowe Price receive no remuneration from the Fund. For the
year 1993, Messrs. Bailey, Dick, Fagin, Lanier, Major, Vos and
Wythes, received from the Blue Chip Growth, Dividend Growth and
Mid-Cap Growth Funds directors' fees aggregating $_____________,
including expenses. The fee paid to each such director is
calculated in accordance with the following fee schedule: a fee
of $25,000 per year as the initial fee for the first Price
Fund/Trust on which a director serves; a fee of $5,000 for each
of the second, third, and fourth Price Funds/Trusts on which a
PAGE 15
director serves; a fee of $2,500 for each of the fifth and sixth
Price Funds/Trusts on which a director serves; and a fee of
$1,000 for each of the seventh and any additional Price
Funds/Trusts on which a director serves. For the year ended
December 31, 1993, this group of directors received from the Fund
directors' fees aggregating $___________, including expenses.
Those nominees indicated by an asterisk (*) are persons who, for
purposes of Section 2(a)(19) of the Investment Company Act of
1940 are considered "interested persons" of T. Rowe Price. Each
such nominee is deemed to be an "interested person" by virtue of
his officership, directorship, and/or employment with T. Rowe
Price. Messrs. Bailey, Dick, Fagin, Lanier, Major, Vos and
Wythes are the independent directors of the Blue Chip Growth,
Dividend Growth, and Mid-Cap Growth Funds.
The Price Funds have established a Joint Audit Committee,
which is comprised of at least one independent director
representing each of the Funds. Messrs. Bailey, Dick and Vos,
directors of the Fund, are members of the Committee. The other
members is Anthony W. Deering. These directors also receive a
fee of $500 for each Committee meeting attended. The Audit
Committee holds two regular meetings during each fiscal year, at
which time it meets with the independent accountants of the Price
Funds to review: (1) the services provided; (2) the findings of
the most recent audit; (3) management's response to the findings
of the most recent audit; (4) the scope of the audit to be
performed; (5) the accountants' fees; and (6) any accounting
questions relating to particular areas of the Price Funds'
operations or the operations of parties dealing with the Price
Funds, as circumstances indicate.
The Board of Directors of the Fund has an Executive
Committee which is authorized to assume all the powers of the
Board to manage the Fund, in the intervals between meetings of
the Board, except the powers prohibited by statute from being
delegated.
The Board of Directors of the Fund has a Nominating
Committee, which is comprised of all the Price Fund's independent
directors. The Nominating Committee, which functions only in an
advisory capacity, is responsible for reviewing and recommending
to the full Board candidates for election as independent
directors to fill vacancies on the Board of Directors. The
Nominating Committee will consider written recommendations from
shareholders for possible nominees. Shareholders should submit
their recommendations to the Secretary of the Fund. Members of
the Nominating Committee met informally during the last full
fiscal year, but the Committee as such held no formal meetings.
The Board of Directors held four meetings for Blue Chip
Growth Fund and seven meetings for Mid-Cap Growth and Dividend
Growth Funds during the last full fiscal year. With the
exception of Mr. Major of Blue Chip and Mid-Cap Growth Fund, and
PAGE 16
Messrs. Major and Testa of Dividend Growth Fund, each director
standing for election or reelection attended 75% or more of the
aggregate of (i) the total number of meetings of the Board of
Directors (held during the period for which he was a director)
and (ii) the total number of meetings held by all committees of
the Board on which he served.
2. APPROVAL OR DISAPPROVAL OF CHANGES TO THE FUNDS' FUNDAMENTAL
INVESTMENT POLICIES
The Investment Company Act of 1940 (the "1940 Act") requires
investment companies such as the Funds to adopt certain specific
investment policies that can be changed only by shareholder vote.
An investment company may also elect to designate other policies
that may be changed only by shareholder vote. Both types of
policies are often referred to as "fundamental policies."
Certain of the Funds' fundamental policies have been adopted in
the past to reflect regulatory, business or industry conditions
that are no longer in effect. Accordingly, each Fund's Board of
Directors has approved, and has authorized the submission to each
Fund's shareholders for their approval, the amendment and/or
reclassification of certain of the fundamental policies
applicable to each Fund.
The proposed amendments would (i) simplify and modernize the
limitations that are required to be fundamental by the 1940 Act
and (ii) eliminate as fundamental any limitations that are not
required to be fundamental by that Act. By reducing to a minimum
those limitations that can be changed only by shareholder vote,
the Funds would be able to minimize the costs and delay
associated with holding frequent annual shareholders' meetings.
The Directors also believe that T. Rowe Price's ability to manage
the Funds' assets in a changing investment environment will be
enhanced and that investment management opportunities will be
increased by these changes.
In the following discussion "the Fund" is intended to refer
to each Fund.
EACH FUND
A. PROPOSAL TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT POLICY
TO INCREASE ITS ABILITY TO ENGAGE IN BORROWING TRANSACTIONS
The Board of Directors has proposed an amendment to the
Fund's fundamental policy which would permit the Fund greater
flexibility to engage in borrowing transactions. The current
restriction is not required by applicable law. The new
restriction would (1) allow the Fund to borrow slightly larger
amounts of money; (2) borrow from persons other than banks or
other Price Funds to the extent permitted by applicable law; and
(3) clarify that the Fund's restriction on borrowing does not
PAGE 17
prohibit the Fund from entering into reverse repurchase
agreements and other proper investments and transactions. The
new restriction would also conform the Fund's policy on borrowing
to one which is expected to become standard for all T. Rowe Price
mutual funds. The Board believes that standardized policies will
assist the Fund and T. Rowe Price in monitoring compliance with
the various investment restrictions to which the T. Rowe Price
mutual funds are subject. The Board has directed that such
amendment be submitted to shareholders for approval or
disapproval.
The Fund's current fundamental policy in the area of
borrowing is as follows:
Blue Chip Growth Fund
"[As a matter of fundamental policy, the Fund may not:]
Borrow money, except the Fund may borrow for non-leveraging,
temporary purposes from banks or other Price Funds (1) in
amounts not exceeding 30% of its total assets to meet
redemption requests which might otherwise require untimely
disposition of portfolio securities; or (2) in amounts not
exceeding 5% of its total assets for emergency,
administrative or other proper purposes. Interest paid on
any such borrowings will reduce net investment income. The
Fund may enter into futures contracts as set forth in [its
fundamental policy on futures];"
Dividend Growth Fund
"[As a matter of fundamental policy, the Fund may not:]
Borrow money, except the Fund may borrow for non-leveraging,
temporary purposes from banks or other Price Funds (1) in
amounts not exceeding 30% of its total assets to meet
redemption requests which might otherwise require untimely
disposition of portfolio securities (see page 6 of
prospectus); or (2) in amounts not exceeding 5% of its total
assets for emergency, administrative or other proper
purposes. Interest paid on any such borrowings will reduce
net investment income. The Fund may enter into futures
contracts as set forth in [its fundamental policy on
futures];"
Mid-Cap Growth Fund
"[As a matter of fundamental policy, the Fund may not:]
Borrow money, except the Fund may borrow for non-leveraging
purposes from banks or other Price Funds (1) in amounts not
exceeding 30% of its total assets as a temporary measure to
meet redemption requests which might otherwise require
untimely disposition of portfolio securities (see page 6 of
prospectus); or (2) in amounts not exceeding 5% of its total
assets for emergency, administrative or other proper
PAGE 18
purposes. Interest paid on any such borrowings will reduce
net investment income. The Fund may enter into futures
contracts as set forth in [its fundamental policy on
futures];"
As amended, the Fund's fundamental policy on borrowing would
be as follows:
"[As a matter of fundamental policy, the Fund may not:]
Borrow money except that the Fund may (i) borrow for non-
leveraging, temporary or emergency purposes and (ii) engage
in reverse repurchase agreements and make other investments
or engage in other transactions, which may involve a
borrowing, in a manner consistent with the Fund's investment
objective and program, provided that the combination of (i)
and (ii) shall not exceed 33 1/3% of the value of the Fund's
total assets (including the amount borrowed) less
liabilities (other than borrowings) or such other percentage
permitted by law. Any borrowings which come to exceed this
amount will be reduced in accordance with applicable law.
The Fund may borrow from banks, other Price Funds or other
persons to the extent permitted by applicable law."
If approved, the primary effect of the amendment would be to
allow the Fund to: (1) borrow up to 33 1/3% (or such higher
amount permitted by law) of its total assets (including the
amount borrowed) less liabilities other than borrowings) as
opposed to the current limitation of 30%; (2) borrow from persons
other than banks or other mutual funds advised by T. Rowe Price
or Rowe Price-Fleming International, Inc. ("Price Funds"); (3)
enter into reverse repurchase agreements and other investments
consistent with the Fund's investment objective and program; and
(4) eliminate the distinction between the amount which may be
borrowed to meet redemption requests (currently 30%) and the
amount which may be borrowed for other purposes (currently 5%).
33 1/3% Limitation
The increase in the amount of money which the Fund could
borrow is designed to allow the Fund greater flexibility to meet
shareholder redemption requests should the need arise. As is the
case under its current policy, the Fund would not borrow to
increase income through leveraging. It is possible the Fund's
ability to borrow a larger percentage of its assets could
adversely affect the Fund if the Fund were unable to liquidate
sufficient securities, or the Fund were forced to liquidate
securities at unfavorable prices, to pay back the borrowed sums.
However, the Directors believe the risks of such possibilities
are outweighed by the greater flexibility the Fund would have in
borrowing. The increased ability to borrow should permit the
Fund, if it were faced with substantial shareholder redemptions,
to avoid liquidating securities at unfavorable prices or times to
a greater degree than would be the case under the current policy.
PAGE 19
Reverse Repurchase Agreements
To facilitate portfolio liquidity, it is possible the Fund
could enter into reverse repurchase agreements. Reverse
repurchase agreements are ordinary repurchase agreements in which
a fund is a seller of, rather than the investor in, securities,
and agrees to repurchase them at an agreed upon time and price.
Reverse repurchase agreements can avoid certain market risks and
transaction costs associated with an outright sale and
repurchase. Reverse repurchase agreements, however, may be
viewed as borrowings. To the extent they are, the proposed
amendment would clarify that the Fund's restrictions on borrowing
would not prohibit the Fund from entering into a reverse
repurchase agreement.
Other Changes
The other proposed changes in the Fund's fundamental policy-
- -(1) to allow the Fund to borrow from persons other than banks
and other Price Funds to the extent consistent with applicable
law; (2) to engage in transactions other than reverse repurchase
agreements which may involve a borrowing; and (3) to apply the
Fund's 33 1/3% limitation on borrowing to all Fund borrowings
regardless of their purpose (as opposed to the current policy
which permits only 5% to be borrowed for purposes other than
meeting redemption requests)--are simply designed to permit the
Fund the greatest degree of flexibility permitted by law in
pursuing its investment program. All activities of the Fund are,
of course, subject to the 1940 Act and the rules and regulations
thereunder as well as various state securities laws.
The Board of Directors recommends that shareholders vote FOR
the proposal.
B. PROPOSAL TO AMEND THE FUND'S FUNDAMENTAL POLICIES ON
INVESTING IN COMMODITIES AND FUTURES CONTRACTS TO PROVIDE
GREATER FLEXIBILITY IN FUTURES TRADING
The Board of Directors has proposed amendments to the Fund's
Fundamental Investment Policies on commodities and futures. The
principal purpose of the proposals is to conform the Fund's
policies on commodities and futures with policies which are
expected to become standard for all T. Rowe Price mutual funds.
The Board has directed that such amendments be submitted to
shareholders for approval or disapproval.
The Fund's current fundamental policies in the area of
investing in commodities and futures are as follows:
PAGE 20
Commodities
"[As a matter of fundamental policy, the Fund may not:]
Purchase or sell commodities or commodity contracts; except
that it may (i) enter into futures contracts and options on
futures contracts, subject to [its fundamental policy of
futures]; (ii) enter into forward foreign currency exchange
contracts (although the Fund does not consider such
contracts to be commodities); and (iii) invest in
instruments which have the characteristics of both futures
contracts and securities;"
Futures Contracts
"[As a matter of fundamental policy, the Fund may not:]
Enter into a futures contract or an option thereon, although
the Fund may enter into financial and currency futures
contracts or options on financial and currency futures
contracts;"
As amended, the Fund's fundamental policies on investing in
futures and commodities would be combined and would be as
follows:
"[As a matter of fundamental policy, the Fund may not:]
Purchase or sell physical commodities; except that it may
enter into futures contracts and options thereon;"
In addition, the Board of Directors intends to adopt the
following operating policy, which may be changed by the Board of
Directors without further shareholder approval.
"[As a matter of operating policy, the Fund will not:]
Purchase a futures contract or an option thereon if, with
respect to positions in futures or options on futures which
do not represent bona fide hedging, the aggregate initial
margin and premiums on such positions would exceed 5% of the
Fund's net asset value (the "New Operating Policy")."
If adopted, the primary effect of the amendment would be to
remove the restriction in the current policies the Fund may only
enter into financial and currency futures. Although not
specifically described in the amended fundamental restriction,
the Fund would continue to have the ability to enter into forward
foreign currency contracts and to invest in instruments which
have the characteristics of futures and securities or whose value
is determined, in whole or in part, by reference to commodity
prices.
The Fund has no current intention of investing in other
types of futures. However, the new policy, if adopted, would
allow it to do so. The risks of any such futures activity could
differ from the risks of the Fund's currently permitted futures
PAGE 21
activity. As noted, the principal purpose of seeking the
proposed change in the Fund's fundamental policies is to conform
such policies to ones which are expected to become standard for
all T. Rowe Price Funds. The Board of Directors believes that
standardized policies will assist the Fund and T. Rowe Price in
monitoring compliance with the various investment restrictions to
which the T. Rowe Price Funds are subject.
The Board of Directors recommends that shareholders vote FOR
the proposal.
C. PROPOSAL TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT POLICY
REGARDING THE MAKING OF LOANS
The Board of Directors has proposed an amendment to the
Fundamental Investment Policies of the Fund in order to: (i)
increase the amount of its assets which may be subject to its
lending policy; and (ii) allow the Fund to purchase the entire or
any portion of the debt of a company. The new restriction would
also conform the Fund's policy on lending to one which is
expected to become standard for all T. Rowe Price mutual funds.
The Board believes that standardized policies will assist the
Fund and T. Rowe Price in monitoring compliance with the various
investment restrictions to which the T. Rowe Price mutual funds
are subject. The Board has directed that such amendment be
submitted to shareholders for approval or disapproval.
The Fund's current fundamental policy in the area of making
loans is as follows:
"[As a matter of fundamental policy, the Fund may not:] Make
loans, although the Fund may (i) purchase money market
securities and enter into repurchase agreements; (ii)
acquire publicly-distributed bonds, debentures, notes and
other debt securities and purchase debt securities at
private placement; (iii) lend portfolio securities; and (iv)
participate in an interfund lending program with other Price
Funds provided that no such loan may be made if, as a
result, the aggregate of such loans would exceed 30% of the
value of the Fund's total assets;"
As amended, the Fund's fundamental policy on loans would be
as follows:
"[As a matter of fundamental policy, the Fund may not:] Make
loans, although the Fund may (i) lend portfolio securities
and participate in an interfund lending program with other
Price Funds provided that no such loan may be made if, as a
result, the aggregate of such loans would exceed 33 1/3% of
the value of the Fund's total assets; (ii) purchase money
market securities and enter into repurchase agreements; and
(iii) acquire publicly-distributed or privately-placed debt
securities and purchase debt;"
PAGE 22
33 1/3% Restriction
The Fund's current fundamental policy on lending restricts
the Fund to lending no more than 30% of the value of the Fund's
total assets. The new policy would raise this amount to 33 1/3%
of the value of the Fund's total assets. The purpose of this
change is to conform the Fund's policy to one that is expected to
become standard for all Price Funds and to permit the Fund to
lend its assets to the maximum extent permitted under applicable
law. The Board of Directors does not view this change as
significantly raising the level of risk to which the Fund would
be subject.
Purchase of Debt
The Fund's fundamental policy on lending allows the Fund to
purchase debt securities as an exception to the general
limitations on making loans. However, there is no similar
exception for the purchase of straight debt, e.g., debt held by a
bank for example which might not be considered a debt security.
Such an investment might be subject to greater risks of liquidity
and unavailability of public information than would be the case
for an investment in a publicly held security. The primary
purpose of this proposal is to conform the Fund's fundamental
policy in this area to one that is expected to become standard
for all Price Funds. The Fund will continue to invest primarily
in equity securities. However, the Board of Directors believes
that increased standardization will help promote operational
efficiencies and facilitate monitoring of compliance with the
Fund's investment restrictions.
Other Matters
For purposes of the restriction on lending, the Fund will
consider the acquisition of a debt security to include the
execution of a note or other evidence of an extension of credit
with a term of more than nine months.
The Board of Directors recommends that shareholders vote FOR
the proposal.
D. PROPOSAL TO CHANGE THE DESIGNATION OF THE FUND'S FUNDAMENTAL
POLICY ON PURCHASING SECURITIES ON MARGIN
The Board of Directors has proposed that the Fund's
Fundamental Investment Policy on purchasing securities on margin
be changed from a fundamental policy to an operating policy.
Fundamental policies may be changed only by shareholder approval,
while operating policies may be changed by the Board of Directors
without shareholder approval. The purpose of the proposal is to
allow the Fund greater flexibility in responding to market and
regulatory developments by providing the Board of Directors with
PAGE 23
the authority to make changes in the Fund's policy on margin
without further shareholder approval. The new restriction would
also conform the Fund's policy on margin to one which is expected
to become standard for all T. Rowe Price mutual funds. The Board
believes that standardized policies will assist the Fund and T.
Rowe Price in monitoring compliance with the various investment
restrictions to which the T. Rowe Price mutual funds are subject.
The Board has directed that such change be submitted to
shareholders for approval or disapproval.
As changed, the operating policy would be as follows:
"[As a matter of operating policy, the Fund may not:]
Purchase securities on margin, except (i) for use of short-
term credit necessary for clearance of purchases of
portfolio securities and (ii) it may make margin deposits in
connection with futures contracts or other permissible
investments;"
The Board of Directors recommends that shareholders vote FOR
the proposal.
Mid-Cap Growth Fund Only
E. PROPOSAL TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT POLICY
ON THE ISSUANCE OF SENIOR SECURITIES
The Fund's Board of Directors has proposed an amendment to
the Fund's fundamental policy on investing in senior securities
which would allow the Fund to invest in senior securities to the
extent permitted under the Investment Company Act of 1940. The
new policy, if adopted, would provide the Fund with greater
flexibility in pursuing its investment objective and program.
The Board has directed that such amendment be submitted to
shareholders for approval or disapproval.
The Fund's current fundamental policy in the area of issuing
senior securities is as follows:
"[As a matter of fundamental policy, the Fund may not:]
Issue senior securities;"
As amended, the Fund's fundamental policy on issuing senior
securities would be as follows:
"[As a matter of fundamental policy, the Fund may not:]
Issue senior securities except in compliance with the
Investment Company Act of 1940;"
The 1940 Act limits a Fund's ability to issue senior
securities or engage in investment techniques which could be
deemed to create a senior security. Although the definition of a
"senior security" involves complex statutory and regulatory
PAGE 24
concepts, a senior security is generally thought of as a class of
security preferred over shares of the Fund with respect to the
Fund's assets or earnings. It generally does not include
temporary or emergency borrowings by the Fund (which might occur
to meet shareholder redemption requests) in accordance with
federal law and the Fund's investment limitations. Various
investment techniques that obligate the Fund to pay money at a
future date (e.g., the purchase of securities for settlement on a
date that is longer than required under normal settlement
practices) occasionally raise questions as to whether a "senior
security" is created. The Fund utilizes such techniques only in
accordance with applicable regulatory requirements under the 1940
Act. Although the Fund has no current intention of issuing
senior securities, the proposed change will clarify the Fund's
authority to issue senior securities in accordance with the 1940
Act without the need to seek shareholder approval.
The Board of Directors recommends that shareholders vote FOR
the proposal.
EACH FUND
3. RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT
ACCOUNTANTS
The selection by each Fund's Board of Directors of the firm
of Price Waterhouse as the independent accountants for each Fund
for the fiscal year 1994 is to be submitted for ratification or
rejection by the shareholders at the Shareholder Meeting. The
firm of Price Waterhouse has served each Fund as independent
accountants since its inception. The independent accountants
have advised each Fund that they have no direct or material
indirect financial interest in the Fund. Representatives of the
firm of Price Waterhouse are expected to be present at the
Shareholder Meeting and will be available to make a statement, if
they desire to do so, and to respond to appropriate questions
which the shareholders may wish to address to them.
Mid-Cap Growth Fund Only
4. PROPOSAL TO REMOVE INVESTING FOR INCOME AS A SECONDARY
OBJECTIVE OF THE FUND
The Fund is seeking approval to remove "investing for
income" as a secondary objective of the Fund. The original
intent of mentioning income as a secondary objective was to
indicate that income would be incidental to pursuit of the Fund's
primary objective - long-term growth of capital by investing
primarily in the common stock of companies with medium-sized
market capitalizations ("mid-cap") and which have the potential
for above-average growth. In light of the minor role income has
always played in the Fund's investment program and performance,
and to avoid any confusion about the importance of current
PAGE 25
income, the Board of Directors has proposed that it be deleted as
a secondary objective.
The Board of Directors recommends that shareholders vote FOR
the proposal to delete income as a secondary objective of the
Fund.
INVESTMENT MANAGER
The Fund's investment manager is T. Rowe Price, a Maryland
corporation, 100 East Pratt Street, Baltimore, Maryland 21202.
The principal executive officer of T. Rowe Price is George J.
Collins, who together with Thomas H. Broadus, Jr., James E.
Halbkat, Jr., Carter O. Hoffman, Henry H. Hopkins, James S.
Riepe, George A. Roche, John W. Rosenblum, Charles H. Salisbury,
Jr., Robert L. Strickland, M. David Testa, and Philip C. Walsh,
constitute its Board of Directors. The address of each of these
persons, with the exception of Messrs. Halbkat, Rosenblum,
Stickland and Walsh, is 100 East Pratt Street, Baltimore,
Maryland 21202, and, with the exception of Messrs. Halbkat,
Rosenblum, Strickland, and Walsh, all are employed by T. Rowe
Price. Mr. Halbkat is President of U.S. Monitor Corporation, a
provider of public response systems, P.O. Box 23109, Hilton Head
Island, South Carolina 29925. Mr. Rosenblum, whose address is
P.O. Box 6550, Charlottesville, Virginia 22906, is the Tayloe
Murphy Professor at the University of Virginia, and a director
of: Chesapeake Corporation, a manufacturer of paper products;
Cadmus Communications Corp., a provider of printing and
communication services; Comdial Corporation, a manufacturer of
telephone systems for businesses; and Cone Mills Corporation, a
textiles producer. Mr. Strickland is Chairman of Lowe's
Companies, Inc., a retailer of specialty home supplies, 604 Two
Piedmont Plaza Building, Winston-Salem, North Carolina 27104.
Mr. Walsh, whose address is Blue Mill Road, Morristown, New
Jersey 07960, is a consultant to Cyprus Amax Minerals Company,
Englewood, Colorado, and a director of Piedmont Mining Company,
Charlotte, North Carolina.
The officers of the Funds (other than the nominees for
election or reelection as directors) and their positions with T.
Rowe Price are as follows:
Blue Chip Growth Fund
Position Position with
Officer with Fund Manager
Henry H. Hopkins Vice President Managing Director
Larry J. Puglia Vice President Vice President
James S Riepe Vice President Managing Director
Lenora V. Hornung Secretary Vice President
Carmen F. Deyesu Treasurer Vice President
PAGE 26
David S. Middleton Controller Vice President
Roger L. Fiery Assistant Vice President Employee
Edward T. Schneider Assistant Vice President Employee
Ingrid I. Vordemberge Assistant Vice President Employee
Dividend Growth Fund
*Brian C. Rogers President Managing Director
**William J. Stromberg Executive Vice President Vice President
Henry H. Hopkins Vice President Managing Director
Larry J. Puglia Vice President Vice President
James S. Riepe Vice President Managing Director
Alan R. Stuart Vice President Vice President
Lenora V. Hornung Secretary Vice President
Carmen F. Deyesu Treasurer Vice President
David S. Middleton Controller Vice President
Roger L. Fiery Assistant Vice President Employee
Edward T. Schneider Assistant Vice President Employee
Ingrid I. Vordemberge Assistant Vice President Employee
Mid-Cap Growth Fund
***Brian W.H. Berghuis President Vice President
Marcy L. Fisher Vice President Assistant Vice
President
Henry H. Hopkins Vice President Managing Director
John F. Wakeman Vice President Vice President
Richard T. Whitney Vice President Vice President
Lenora V. Hornung Secretary Vice President
Carmen F. Deyesu Treasurer Vice President
David S. Middleton Controller Vice President
Roger L. Fiery Assistant Vice President Employee
Edward T. Schneider Assistant Vice President Employee
Ingrid I. Vordemberge Assistant Vice President Employee
* Mr. Rogers' date of birth is _____. He has been the President
of the Dividend Growth Fund since 1992 and has been employed by
T. Rowe Price since ____.
** Mr. Stromberg's date of birth is _____. He has been the
Executive Vice President of the Dividend Growth Fund since ____
and has been employed by T. Rowe Price since ____.
*** Mr. Berghuis' date of birth is _____. He has been the
President of the Mid-Cap Growth Fund since ____ and has been
employed by T. Rowe Price since ____.
The Funds have an Underwriting Agreement with T. Rowe Price
Investment Services, Inc. ("Investment Services"), a Transfer
Agency Agreement with T. Rowe Price Services, Inc. ("Price
Services"), and an Agreement with T. Rowe Price Retirement Plan
Services, Inc. ("Retirement Services"), which are wholly-owned
subsidiaries of T. Rowe Price. In addition, the Funds have an
Agreement with T. Rowe Price to perform fund accounting services.
James S. Riepe, a Vice President and Director of the Blue Chip
PAGE 27
Growth and Dividend Growth Funds and the Chairman of the Board of
the Mid-Cap Growth Fund, is Chairman of the Board of Price
Services and Retirement Services and President and Director of
Investment Services. Henry H. Hopkins, a Vice President of the
Funds, is a Vice President and Director of both Investment
Services and Price Services and a Vice President of Retirement
Services. Edward T. Schneider, an Assistant Vice President of
the Funds, is a Vice President of Price Services. Certain
officers of the Funds own shares of the common stock of T. Rowe
Price, its only class of securities.
The following information pertains to transactions involving
common stock of T. Rowe Price, par value $.20 per share
("Stock"), during the period January 1, 1993 through December 31,
1993. There were no transactions during the period by any
director or officer of the Fund, or any director or officer of T.
Rowe Price which involved more than 1% of the outstanding Stock
of T. Rowe Price. These transactions did not involve, and should
not be mistaken for, transactions in the stock of the Fund.
During the period, the holders of certain options purchased
a total of 343,525 shares of common stock at varying prices from
$0.67 to $18.75 per share. Pursuant to the terms of T. Rowe
Price's Employee Stock Purchase Plan, eligible employees of T.
Rowe Price and its subsidiaries purchased an aggregate of 96,931
shares at fair market value. Such shares were purchased in the
open market during this period for employees' accounts.
The Company's Board of Directors has approved the repurchase
of shares of its common stock in the open market. During 1993,
the Company purchased 80,000 common shares under this plan,
leaving 1,432,000 shares authorized for future repurchase at
December 31, 1993.
During the period, T. Rowe Price issued 1,154,000 common
stock options with an exercise price of $28.13 per share to
certain employees under terms of the 1990 and 1993 Stock
Incentive Plans.
An audited consolidated balance sheet of T. Rowe Price as of
December 31, 1993, is included in this Proxy Statement.
INVESTMENT MANAGEMENT AGREEMENT
T. Rowe Price serves as investment manager to the Funds
pursuant to their respective Investment Management Agreements
(each the "Management Agreement" and collectively the "Management
Agreements"). The Blue Chip Growth, Dividend Growth and Mid-Cap
Growth Funds' Management Agreements are dated April 22, 1993,
December 16, 1992 and March 6, 1991, respectively. Each Fund's
Management Agreement was approved by its respective Board of
Directors and T. Rowe Price, its sole shareholders, on the above-
PAGE 28
referenced dates. By their terms, the Management Agreements will
continue in effect from year to year as long as they are approved
annually by each Fund's Board of Directors (at a meeting called
for that purpose) or by vote of a majority of each Fund's
outstanding shares. In either case, renewal of the Management
Agreement must be approved by a majority of each Fund's
independent directors. On March __, 1994, the directors of each
Fund, including all of the independent directors, voted to extend
the Management Agreement for an additional period of one year,
commencing May 1, 1994, and terminating April 30, 1995. Each
Management Agreement is subject to termination by either party
without penalty on 60 days' written notice to the other and will
terminate automatically in the event of assignment.
Under each Management Agreement, T. Rowe Price provides the
Fund with discretionary investment services. Specifically, T.
Rowe Price is responsible for supervising and directing the
investments of each Fund in accordance with the Funds' investment
objectives, programs, and restrictions as provided in their
prospectuses and Statements of Additional Information. T. Rowe
Price is also responsible for effecting all security transactions
on behalf of the Funds, including the negotiation of commissions
and the allocation of principal business and portfolio brokerage.
In addition to these services, T. Rowe Price provides the Funds
with certain corporate administrative services, including:
maintaining each Fund's corporate existence, corporate records,
and registering and qualifying Fund shares under federal and
state laws; monitoring the financial, accounting, and
administrative functions of the Funds; maintaining liaison with
the agents employed by the Funds, such as each Fund's custodian
and transfer agent; assisting the Funds in the coordination of
such agents' activities; and permitting T. Rowe Price's employees
to serve as officers, directors, and committee members of the
Funds without cost to the Funds.
Each Fund's Management Agreement also provides that T. Rowe
Price, its directors, officers, employees, and certain other
persons performing specific functions for the Fund will only be
liable to the Fund for losses resulting from willful misfeasance,
bad faith, gross negligence, or reckless disregard of duty.
The Management Agreement provides that each Fund will bear
all expenses of its operations not specifically assumed by T.
Rowe Price. However, in compliance with certain state
regulations, T. Rowe Price will reimburse the Funds for any
expenses (excluding interest, taxes, brokerage, other
expenditures which are capitalized in accordance with generally
accepted accounting principles, and extraordinary expenses) which
in any year exceed the limits prescribed by any state in which
the Funds' shares are qualified for sale. Presently, the most
restrictive expense ratio limitation imposed by any state is 2.5%
of the first $30 million of a Fund's average daily net assets, 2%
PAGE 29
of the next $70 million of such assets, and 1.5% of net assets in
excess of $100 million. For the purpose of determining whether a
Fund is entitled to reimbursement, the expenses of the Fund are
calculated on a monthly basis. If the Fund is entitled to
reimbursement, that month's management fee will be reduced or
postponed, with any adjustment made after the end of the year.
Blue Chip Growth Fund Only
In the interest of limiting the expenses of the Fund during
its initial period of operations, T. Rowe Price agreed to bear
any expenses through December 31, 1994, which would cause the
Fund's ratio of expenses to average net assets to exceed 1.25%.
Expenses paid or assumed under this agreement are subject to
reimbursement to T. Rowe Price by the Fund whenever the Fund's
expense ratio is below 1.25%; however, no reimbursement will be
made after December 31, 1996, or if it would result in the
expense ratio exceeding 1.25%. The Management Agreement also
provides that one or more additional expense limitation periods
(of the same or different levels and time periods) may be
implemented after the expiration of the current one on December
31, 1994, and that with respect to any such additional limitation
period, the Fund may reimburse T. Rowe Price, provided the
reimbursement does not result in the Fund's aggregate expenses
exceeding the additional expense limitation.
Dividend Growth Fund Only
In the interest of limiting the expenses of the Fund during
its initial period of operations, T. Rowe Price has agreed to
bear any expenses through December 31, 1994 which would cause the
Fund's ratio of expenses to average net assets to exceed 1.00%.
Expenses paid or assumed by T. Rowe Price under this Agreement
are subject to reimbursement by the Fund whenever the Fund's
expense ratio is below 1.00%; however, no reimbursement will be
made after December 31, 1996, or if it would result in the
expense ratio exceeding 1.00%. The Management Agreement also
provides that one or more additional expense limitation periods
(of the same or different levels and time periods) may be
implemented after the expiration of the current one on December
31, 1994, and that with respect to any such additional limitation
period, the Fund may reimburse T. Rowe Price, provided the
reimbursement does not result in the Fund's aggregate expenses
exceeding the additional expense limitation.
Mid-Cap Growth Fund Only
In the interest of limiting the expenses of the Fund during
its initial period of operations, T. Rowe Price agreed to bear
any expenses through December 31, 1993, which would cause the
Fund's ratio of expenses to average net assets to exceed 1.25%.
Effective January 1, 1994, T. Rowe Price agreed to extend the
PAGE 30
Fund's 1.25% expense limitation for a period of two years through
December 31, 1995. Expenses paid or assumed under each agreement
are subject to reimbursement to T. Rowe Price by the Fund
whenever the Fund's expense ratio is below 1.25%. Expenses paid
or assumed under each agreement are subject to reimbursement to
T. Rowe Price by the Fund whenever the Fund's expense ratio is
below 1.25%; however, no reimbursement will be made after
December 31, 1995 (for the first agreement), or December 31, 1997
(for the second agreement), or if it would result in the expense
ratio exceeding 1.25%. The Management Agreement also provides
that one or more additional expense limitation periods (of the
same or different levels and time periods) may be implemented
after the expiration of the current one on December 31, 1993, and
that with respect to any such additional limitation period, the
Fund may reimburse T. Rowe Price, provided the reimbursement does
not result in the Fund's aggregate expenses exceeding the
additional expense limitation.
Pursuant to this agreement, $41,000 of management fees were
not accrued by the Fund for the period ended December 31, 1992
and $51,000 of other Fund expenses borne by the Manager are
subject to future reimbursement.
The following chart shows the ratio of operating expenses to
average net assets of each Fund for the last three years ended
December 31.
1993 1992 1991
____ ____ ____
Blue Chip Growth Fund 1.25% * *
Dividend Growth Fund 1.00% 1.00% *
Mid-Cap Growth Fund 1.25% 1.25% *
*Prior to Fund operations.
For its services to each Fund under the Management
Agreement, T. Rowe Price is paid a management fee ("Management
Fee") consisting of two elements: a "group" fee ("Group Fee") and
an "individual" fund fee ("Individual Fund Fee"). The Group Fee
varies and is based on the combined net assets of all of the
Price Funds distributed by T. Rowe Price Investment Services,
Inc., other than institutional or "private label" products. For
this purpose, the Price Funds include all funds managed and
sponsored by T. Rowe Price as well as those Funds managed and
sponsored by Rowe Price-Fleming International, Inc. Each Fund
pays, as its portion of the Group Fee, an amount equal to the
ratio of its daily net assets to the daily net assets of all the
Price Funds. In addition, each Fund pays a flat Individual Fund
Fee of 0.30% for the Blue Chip Growth Fund, 0.20% for the
Dividend Growth Fund and 0.35% for the Mid-Cap Growth Fund, based
on the net assets of the Fund. Based on combined Price Funds'
PAGE 31
assets of approximately $34.7 billion at December 31, 1993 the
group fee was 0.35% and the total management fee for the year
would have been an annual rate of 0.65%, 0.55% and 0.70% of net
assets of the Blue Chip Growth, Dividend Growth and Mid-Cap
Growth Funds, respectively. The following chart shows the net
assets and the management fees, paid by each Fund to T. Rowe
Price, at December 31, 1993.
Net Assets Management Fee
__________ ______________
Blue Chip Growth Fund $24,650,502 $ 0
Dividend Growth Fund $40,862,148 $ 0
Mid-Cap Growth Fund $65,426,483 $152,853
PORTFOLIO TRANSACTIONS
In the following discussion "the Fund" is intended to refer
to each Fund.
Investment or Brokerage Discretion
Decisions with respect to the purchase and sale of portfolio
securities on behalf of the Fund are made by T. Rowe Price. T.
Rowe Price is also responsible for implementing these decisions,
including the negotiation of commissions and the allocation of
portfolio brokerage and principal business.
How Brokers and Dealers are Selected
Equity Securities
In purchasing and selling the Fund's portfolio securities,
it is T. Rowe Price's policy to obtain quality execution at the
most favorable prices through responsible brokers and dealers
and, in the case of agency transactions, at competitive
commission rates. However, under certain conditions, the Fund may
pay higher brokerage commissions in return for brokerage and
research services. As a general practice, over-the-counter
orders are executed with market-makers. In selecting among
market-makers, T. Rowe Price generally seeks to select those it
believes to be actively and effectively trading the security
being purchased or sold. In selecting broker-dealers to execute
the Fund's portfolio transactions, consideration is given to such
factors as the price of the security, the rate of the commission,
the size and difficulty of the order, the reliability, integrity,
financial condition, general execution and operational
capabilities of competing brokers and dealers, and brokerage and
research services provided by them. It is not the policy of T.
Rowe Price to seek the lowest available commission rate where it
is believed that a broker or dealer charging a higher commission
PAGE 32
rate would offer greater reliability or provide better price or
execution.
Fixed Income Securities
Fixed income securities are generally purchased from the
issuer or a primary market-maker acting as principal for the
securities on a net basis, with no brokerage commission being
paid by the client. Transactions placed through dealers serving
as primary market-makers reflect the spread between the bid and
asked prices. Securities may also be purchased from underwriters
at prices which include underwriting fees.
With respect to equity and fixed income securities, T. Rowe
Price may effect principal transactions on behalf of the Fund
with a broker or dealer who furnishes brokerage and/or research
services, designate any such broker or dealer to receive selling
concessions, discounts or other allowances, or otherwise deal
with any such broker or dealer in connection with the acquisition
of securities in underwritings.
How Evaluations are Made of the Overall Reasonableness of
Brokerage Commissions Paid
On a continuing basis, T. Rowe Price seeks to determine what
levels of commission rates are reasonable in the marketplace for
transactions executed on behalf of the Fund. In evaluating the
reasonableness of commission rates, T. Rowe Price considers: (a)
historical commission rates, both before and since rates have
been fully negotiable; (b) rates which other institutional
investors are paying, based on available public information; (c)
rates quoted by brokers and dealers; (d) the size of a particular
transaction, in terms of the number of shares, dollar amount, and
number of clients involved; (e) the complexity of a particular
transaction in terms of both execution and settlement; (f) the
level and type of business done with a particular firm over a
period of time; and (g) the extent to which the broker or dealer
has capital at risk in the transaction.
Description of Research Services Received from Brokers and
Dealers
T. Rowe Price receives a wide range of research services
from brokers and dealers. These services include information on
the economy, industries, groups of securities, individual
companies, statistical information, accounting and tax law
interpretations, political developments, legal developments
affecting portfolio securities, technical market action, pricing
and appraisal services, credit analysis, risk measurement
analysis, performance analysis and analysis of corporate
responsibility issues. These services provide both domestic and
international perspective. Research services are received
primarily in the form of written reports, computer generated
PAGE 33
services, telephone contacts and personal meetings with security
analysts. In addition, such services may be provided in the form
of meetings arranged with corporate and industry spokespersons,
economists, academicians and government representatives. In some
cases, research services are generated by third parties but are
provided to T. Rowe Price by or through broker-dealers.
Research services received from brokers and dealers are
supplemental to T. Rowe Price's own research effort and, when
utilized, are subject to internal analysis before being
incorporated by T. Rowe Price into its investment process. As a
practical matter, it would not be possible for T. Rowe Price's
Equity Research Division to generate all of the information
presently provided by brokers and dealers. T. Rowe Price pays
cash for certain research services received from external
sources. T. Rowe Price also allocates brokerage for research
services which are available for cash. While receipt of research
services from brokerage firms has not reduced T. Rowe Price's
normal research activities, the expenses of T. Rowe Price could
be materially increased if it attempted to generate such
additional information through its own staff. To the extent that
research services of value are provided by brokers or dealers, T.
Rowe Price may be relieved of expenses which it might otherwise
bear.
T. Rowe Price has a policy of not allocating brokerage
business in return for products or services other than brokerage
or research services. In accordance with the provisions of
Section 28(e) of the Securities Exchange Act of 1934, T. Rowe
Price may from time to time receive services and products which
serve both research and non-research functions. In such event,
T. Rowe Price makes a good faith determination of the anticipated
research and non-research use of the product or service and
allocates brokerage only with respect to the research component.
Commissions to Brokers who Furnish Research Services
Certain brokers who provide quality execution services also
furnish research services to T. Rowe Price. In order to be
assured of continuing to receive research services considered of
value to its clients, T. Rowe Price has adopted a brokerage
allocation policy embodying the concepts of Section 28(e) of the
Securities Exchange Act of 1934, which permits an investment
adviser to cause an account to pay commission rates in excess of
those another broker or dealer would have charged for effecting
the same transaction, if the adviser determines in good faith
that the commission paid is reasonable in relation to the value
of the brokerage and research services provided. The
determination may be viewed in terms of either the particular
transaction involved or the overall responsibilities of the
adviser with respect to the accounts over which it exercises
investment discretion. Accordingly, while T. Rowe Price cannot
readily determine the extent to which commission rates or net
PAGE 34
prices charged by broker-dealers reflect the value of their
research services, T. Rowe Price would expect to assess the
reasonableness of commissions in light of the total brokerage and
research services provided by each particular broker.
Internal Allocation Procedures
T. Rowe Price has a policy of not precommitting a specific
amount of business to any broker or dealer over any specific time
period. Historically, the majority of brokerage placement has
been determined by the needs of a specific transaction such as
market-making, availability of a buyer or seller of a particular
security, or specialized execution skills. However, T. Rowe
Price does have an internal brokerage allocation procedure for
that portion of its discretionary client brokerage business where
special needs do not exist, or where the business may be
allocated among several brokers which are able to meet the needs
of the transaction.
Each year, T. Rowe Price assesses the contribution of the
brokerage and research services provided by brokers, and attempts
to allocate a portion of its brokerage business in response to
these assessments. Research analysts, counselors, various
investment committees, and the Trading Department each seek to
evaluate the brokerage and research services they receive from
brokers and make judgments as to the level of business which
would recognize such services. In addition, brokers sometimes
suggest a level of business they would like to receive in return
for the various brokerage and research services they provide.
Actual brokerage received by any firm may be less than the
suggested allocations but can, and often does, exceed the
suggestions, because the total brokerage business is allocated on
the basis of all the considerations described above. In no case
is a broker excluded from receiving business from T. Rowe Price
because it has not been identified as providing research
services.
Miscellaneous
T. Rowe Price's brokerage allocation policy is consistently
applied to all its fully discretionary accounts, which represent
a substantial majority of all assets under management. Research
services furnished by brokers through which T. Rowe Price effects
securities transactions may be used in servicing all accounts
(including non-Fund accounts) managed by T. Rowe Price.
Conversely, research services received from brokers which execute
transactions for the Fund are not necessarily used by T. Rowe
Price exclusively in connection with the management of the Fund.
From time to time, orders for clients may be placed through
a computerized transaction network.
PAGE 35
The Fund does not allocate business to any broker-dealer on
the basis of its sales of the Fund's shares. However, this does
not mean that broker-dealers who purchase Fund shares for their
clients will not receive business from the Fund.
Some of T. Rowe Price's other clients have investment
objectives and programs similar to those of the Fund. T. Rowe
Price may occasionally make recommendations to other clients
which result in their purchasing or selling securities
simultaneously with the Fund. As a result, the demand for
securities being purchased or the supply of securities being sold
may increase, and this could have an adverse effect on the price
of those securities. It is T. Rowe Price's policy not to favor
one client over another in making recommendations or in placing
orders. T. Rowe Price frequently follows the practice of
grouping orders of various clients for execution which generally
results in lower commission rates being attained. In certain
cases, where the aggregate order is executed in a series of
transactions at various prices on a given day, each participating
client's proportionate share of such order reflects the average
price paid or received with respect to the total order. T. Rowe
Price has established a general investment policy that it will
ordinarily not make additional purchases of a common stock of a
company for its clients (including the Price Funds) if, as a
result of such purchases, 10% or more of the outstanding common
stock of such company would be held by its clients in the
aggregate.
To the extent possible, T. Rowe Price intends to recapture
solicitation fees paid in connection with tender offers through
T. Rowe Price Investment Services, Inc., the Fund's distributor.
At the present time, T. Rowe Price does not recapture commissions
or underwriting discounts or selling group concessions in
connection with taxable securities acquired in underwritten
offerings. T. Rowe Price does, however, attempt to negotiate
elimination of all or a portion of the selling-group concession
or underwriting discount when purchasing tax-exempt municipal
securities on behalf of its clients in underwritten offerings.
Transactions with Related Brokers and Dealers
As provided in the Investment Management Agreement between
the Fund and T. Rowe Price, T. Rowe Price is responsible not only
for making decisions with respect to the purchase and sale of the
Fund's portfolio securities, but also for implementing these
decisions, including the negotiation of commissions and the
allocation of portfolio brokerage and principal business. It is
expected that T. Rowe Price may place orders for the Fund's
portfolio transactions with broker-dealers through the same
trading desk T. Rowe Price uses for portfolio transactions in
domestic securities. The trading desk accesses brokers and
dealers in various markets in which the Fund's foreign securities
are located. These brokers and dealers may include certain
PAGE 36
affiliates of Robert Fleming Holdings Limited ("Robert Fleming
Holdings") and Jardine Fleming Group Limited ("JFG"), persons
indirectly related to T. Rowe Price. Robert Fleming Holdings,
through Copthall Overseas Limited, a wholly-owned subsidiary,
owns 25% of the common stock of Rowe Price-Fleming International,
Inc. ("RPFI"), an investment adviser registered under the
Investment Advisers Act of 1940. Fifty percent of the common
stock of RPFI is owned by TRP Finance, Inc., a wholly-owned
subsidiary of T. Rowe Price, and the remaining 25% is owned by
Jardine Fleming International Holdings Limited, a subsidiary of
JFG. JFG is 50% owned by Robert Fleming Holdings and 50% owned
by Jardine Matheson Holdings Limited. Orders for the Fund's
portfolio transactions placed with affiliates of Robert Fleming
Holdings and JFG will result in commissions being received by
such affiliates.
The Board of Directors of the Fund has authorized T. Rowe
Price to utilize certain affiliates of Robert Fleming and JFG in
the capacity of broker in connection with the execution of the
Fund's portfolio transactions. These affiliates include, but are
not limited to, Jardine Fleming (Securities) Limited ("JFS"), a
wholly-owned subsidiary of JFG, Robert Fleming & Co. Limited
("RF&Co."), Jardine Fleming Australia Securities Limited, and
Robert Fleming, Inc. (a New York brokerage firm). Other
affiliates of Robert Fleming Holdings and JFG also may be used.
Although it does not believe that the Fund's use of these brokers
would be subject to Section 17(e) of the Investment Company Act
of 1940, the Board of Directors of the Fund has agreed that the
procedures set forth in Rule 17e-1 under that Act will be
followed when using such brokers.
Other
Shown below are the approximate total brokerage commissions,
including the discounts received by securities dealers in
connection with underwritings, paid by the Blue Chip Growth,
Dividend Growth and Mid-Cap Growth Funds for the last three
years:
1993 1992 1991
____ ____ ____
Blue Chip Growth Fund $177,000 * *
Dividend Growth Fund $282,000 * *
Mid-Cap Growth Fund $441,000 $119,000 *
The approximate percentage of these commissions paid to
firms which provided research, statistical, or other services to
T. Rowe Price in connection with the management of each Fund, or
in some cases, to each Fund, for the last three years, are shown
in the following chart.
PAGE 37
1993 1992 1991
____ ____ ____
Blue Chip Growth Fund 10% * *
Dividend Growth Fund 22% * *
Mid-Cap Growth Fund 19% 39% *
The portfolio turnover rate for each Fund for each of the
last three years has been as follows:
1993 1992 1991
____ ____ ____
Blue Chip Growth Fund 152.5% * *
Dividend Growth Fund 51.2% * *
Mid-Cap Growth Fund 62.4% 51.9% *
OTHER BUSINESS
The management of each Fund knows of no other business which
may come before the meeting. However, if any additional matters
are properly presented at the meeting, it is intended that the
persons named in the enclosed proxy, or their substitutes, will
vote such proxy in accordance with their judgment on such
matters.
GENERAL INFORMATION
As of December 31, 1993, there were 2,194,008, 3,560,866 and
4,308,797 shares of the capital stock of the Blue Chip Growth,
Dividend Growth and Mid-Cap Growth Funds, respectively,
outstanding, the Blue Chip Growth and Dividend Growth Funds each
with a par value of $.0001 and the Mid-Cap Growth Fund with a par
value of $.01. Of those shares, approximately _______, ________
and _______, representing ____%, ____% and ____%, respectively,
of the outstanding stock, were registered to the T. Rowe Price
Trust Company as Trustee for participants in the T. Rowe Price
Funds Retirement Plan for Self-Employed (Keogh), as Trustee for
participants in T. Rowe Price Funds 401(k) plans, as Custodian
for participants in the T. Rowe Price Funds Individual Retirement
Account (IRA), as Custodian for participants in various 403(b)(7)
plans, and as Custodian for various Profit Sharing and Money
Purchase plans. The T. Rowe Price Trust Company has no
beneficial interest in such accounts, nor in any other account
for which it may serve as trustee or custodian.
As of December 31, 1993, approximately ________, __________
and ____________ shares of the Blue Chip Growth, Dividend Growth
and Mid-Cap Growth Funds, representing approximately ___%, ____%
and ____%, respectively, of the outstanding stock, were owned by
various private counsel clients of T. Rowe Price, as to which T.
PAGE 38
Rowe Price has discretionary authority. Accordingly, such shares
are deemed to be owned beneficially by T. Rowe Price only for the
limited purpose as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934. T. Rowe Price disclaims actual
beneficial ownership of such shares. In addition, as of December
31, 1993, a wholly-owned subsidiary of T. Rowe Price owned
directly 293,673, 192,738 and 171,195 shares of the Blue Chip
Growth, Dividend Growth and Mid-Cap Growth Funds, respectively,
representing approximately ___%, ____% and ____%, respectively,
of the outstanding stock.
As of December 31, 1993, the officers and directors of the
Blue Chip Growth Fund, as a group, beneficially owned, directly
or indirectly, ___________ shares, representing approximately
____% of the Fund's outstanding stock. The ownership of the
officers and directors reflects their proportionate interests, if
any, in _____________ shares of the Fund which are owned by a
wholly-owned subsidiary of the Fund's investment manager, T. Rowe
Price, and their interests in __________ shares owned by the T.
Rowe Price Associates, Inc. Profit Sharing Trust.
As of December 31, 1993, the officers and directors of the
Dividend Growth Fund, as a group, beneficially owned, directly or
indirectly, ___________ shares, representing approximately ____%
of the Fund's outstanding stock. The ownership of the officers
and directors reflects their proportionate interests, if any, in
_____________ shares of the Fund which are owned by a wholly-
owned subsidiary of the Fund's investment manager, T. Rowe Price,
and their interests in __________ shares owned by the T. Rowe
Price Associates, Inc. Profit Sharing Trust.
As of December 31, 1993, the officers and directors of the
Mid-Cap Growth Fund, as a group, beneficially owned, directly or
indirectly, ___________ shares, representing approximately ____%
of the Fund's outstanding stock. The ownership of the officers
and directors reflects their proportionate interests, if any, in
_____________ shares of the Fund which are owned by a wholly-
owned subsidiary of the Fund's investment manager, T. Rowe Price,
and their interests in __________ shares owned by the T. Rowe
Price Associates, Inc. Profit Sharing Trust.
A copy of the Annual Report of each Fund for the year ended
December 31, 1993, including financial statements, has been
mailed to shareholders of record at the close of business on that
date and to persons who became shareholders of record between
that time and the close of business on February 18, 1993, the
record date for the determination of the shareholders who are
entitled to be notified of and to vote at the meeting.
PAGE 39
ANNUAL MEETINGS
Under Maryland General Corporation Law, any corporation
registered under the Investment Company Act of 1940 ("the Act")
is not required to hold an annual meeting in any year in which
the Act does not require action by shareholders on the election
of directors. The Board of Directors of the Fund has determined
that in order to avoid the significant expense associated with
holding annual meetings, including legal, accounting, printing
and mailing fees incurred in preparing proxy materials, each Fund
will take advantage of these Maryland law provisions.
Accordingly, no annual meetings shall be held in any year in
which a meeting is not otherwise required to be held by the Act
for the election of Directors unless the Board of Directors
otherwise determines that there should be an annual meeting.
However, special meetings will be held in accordance with
applicable law or when otherwise determined by the Board of
Directors. Each Fund's By-Laws reflect this policy.
SHAREHOLDER PROPOSALS
If a shareholder wishes to present a proposal to be included
in the Proxy Statement for the next Annual Meeting, and if such
Annual Meeting is held in April, 1995, such proposal must be
submitted in writing and received by the Corporation's Secretary
at its Baltimore office prior to November 11, 1994.
FINANCIAL STATEMENT OF INVESTMENT MANAGER
The audited consolidated balance sheet of T. Rowe Price
which follows is required by the Investment Company Act of 1940,
and should not be confused with, or mistaken for, the financial
statements of T. Rowe Price Blue Chip Growth Fund, Inc., T. Rowe
Price Dividend Growth Fund, Inc. or T. Rowe Price Mid-Cap Growth
Fund, Inc., which are set forth in the Annual Report for each
Fund.
PAGE 40
REPORT OF INDEPENDENT ACCOUNTANTS
_________________________________
To the Stockholders and Board of Directors
of T. Rowe Price Associates, Inc.
In our opinion, the accompanying consolidated balance sheet
presents fairly, in all material respects, the financial position
of T. Rowe Price Associates, Inc. and its subsidiaries at
December 31, 1993 in conformity with generally accepted
accounting principles. This financial statement is the
responsibility of the Company's management; our responsibility is
to express an opinion on this financial statement based on our
audit. We conducted our audit in accordance with generally
accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Baltimore, Maryland
January 25, 1994
PAGE 41
T. ROWE PRICE ASSOCIATES, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993
(in thousands)
ASSETS
Cash and cash equivalents $ 46,218
Accounts receivable 43,102
Investments in sponsored mutual funds
Short-term bond and money market mutual funds
held as trading securities 27,647
Other funds held as available-for-sale securities 69,423
Partnership and other investments 19,606
Property and equipment 39,828
Goodwill and deferred expenses 9,773
Other assets 7,803
________
$ 263,400
________
________
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 15,111
Accrued retirement and other compensation costs 19,844
Income taxes payable 5,097
Dividends payable 3,784
Debt 12,915
Deferred revenues 1,548
Minority interests in consolidated subsidiaries 9,148
________
Total liabilities 67,447
________
Commitments and contingent liabilities
Stockholders' equity
Common stock, $.20 par value - authorized 48,000,000
shares; issued and outstanding 29,095,039 shares 5,819
Capital in excess of par value 1,197
Unrealized security holding gains 5,345
Retained earnings 183,592
________
Total stockholders' equity 195,953
________
$ 263,400
________
________
The accompanying notes are an integral part of the consolidated
balance sheet.
PAGE 42
T. ROWE PRICE ASSOCIATES, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Associates, Inc. and its consolidated subsidiaries
(the "Company") provide investment advisory and administrative
services to sponsored mutual funds and investment products, and
to private accounts of other institutional and individual
investors.
Basis of preparation
The Company's financial statements are prepared in accordance
with generally accepted accounting principles.
Principles of consolidation
The consolidated financial statements include the accounts of all
majority owned subsidiaries and, by virtue of the Company's
controlling interest, its 50%-owned subsidiary, Rowe Price-
Fleming International, Inc. ("RPFI"). All material intercompany
accounts are eliminated in consolidation.
Cash equivalents
For purposes of financial statement disclosure, cash equivalents
consist of all short-term, highly liquid investments including
certain money market mutual funds and all overnight commercial
paper investments. The cost of these investments is equivalent
to fair value.
Investments in sponsored mutual funds
The Company has historically accounted for its investments in
stock and bond mutual funds at the lower of aggregate cost or
market. On December 31, 1993, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," which
requires the Company to state its mutual fund investments at fair
value and to classify these holdings as either trading (held for
only a short period of time) or available-for-sale securities.
Unrealized holding gains on available-for-sale securities at
December 31, 1993 are reported net of income tax effects in a
separate component of stockholders' equity.
Concentration of credit risk
Financial instruments which potentially expose the Company to
concentrations of credit risk as defined by SFAS No. 105 consist
primarily of investments in sponsored money market and bond
mutual funds and accounts receivable. Credit risk is believed to
be minimal in that counterparties to these financial instruments
have substantial assets including the diversified portfolios
under management by the Company which aggregate $54.4 billion at
December 31, 1993.
PAGE 43
T. ROWE PRICE ASSOCIATES, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Partnership and other investments
The Company invests in various partnerships and ventures
including those sponsored by the Company. These investments
which hold equity securities, venture capital investments, debt
securities and real estate are stated at cost adjusted for the
Company's share of the earnings or losses of the investees
subsequent to the date of investment. Because the majority of
these entities carry their investments at fair value and include
unrealized gains and losses in their reported earnings, the
Company's carrying value for these investments approximates fair
value.
Property and equipment
Property and equipment is stated at cost net of accumulated
depreciation and amortization computed using the straight-line
method. Provisions for depreciation and amortization are based
on the following estimated useful lives: computer and
communications equipment and furniture and other equipment, 3 to
7 years; building, 40 years; leased land, the 50-year lease term;
and leasehold improvements, the shorter of their useful lives or
the remainder of the lease term.
PAGE 44
T. ROWE PRICE ASSOCIATES, INC.
NOTES TO CONSOLIDATED BALANCE SHEET
NOTE 1 - INVESTMENTS IN SPONSORED MUTUAL FUNDS
Investments in sponsored money market mutual funds, which are
classified as cash equivalents in the accompanying consolidated
financial statements, aggregate $45,272,000 at December 31, 1993.
The Company's investments in sponsored mutual funds held as
available-for-sale at December 31, 1993 (in thousands) include:
Gross
unrealized Aggregate
Aggregate holding fair
cost gains value
________ _________ _________
Stock funds $ 34,990 $ 7,025 $ 42,015
Bond funds 26,190 1,218 27,408
________ _______ _________
Total $ 61,180 $ 8,243 $ 69,423
________ _______ _________
________ _______ _________
The Company provides investment advisory and administrative
services to the T. Rowe Price family of mutual funds which had
aggregate assets under management at December 31, 1993 of $34.7
billion. All services rendered by the Company are provided under
contracts that set forth the services to be provided and the fees
to be charged. These contracts are subject to periodic review
and approval by each of the funds' boards of directors and, with
respect to investment advisory contracts, also by the funds'
shareholders. Services rendered to the funds accounted for 71%
of 1993 revenues.
Accounts receivable from the sponsored mutual funds aggregated
$21,741,000 at December 31, 1993.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1993 (in thousands)
consists of:
Computer and communications equipment $ 31,431
Building and leased land 19,756
Furniture and other equipment 13,889
Leasehold improvements 4,691
_________
69,767
Accumulated depreciation and amortization (29,939)
_________
$ 39,828
_________
_________
PAGE 45
T. ROWE PRICE ASSOCIATES, INC.
NOTES TO CONSOLIDATED BALANCE SHEET (Continued)
NOTE 3 - GOODWILL AND DEFERRED EXPENSES
On September 2, 1992, the Company acquired an investment
management subsidiary of USF&G Corporation and combined six USF&G
mutual funds with aggregate net assets of $.5 billion into the T.
Rowe Price family of funds. The total transaction cost which has
been recognized using the purchase method of accounting was
approximately $11,024,000, including goodwill of $8,139,000 which
is being amortized over 11 years using the straight-line method.
Prepaid non-compete and transition services agreements totaling
$2,500,000 are being amortized over their three-year life.
Accumulated amortization at December 31, 1993 aggregates
$2,216,000.
Goodwill of $1,980,000 from an earlier corporate acquisition is
being amortized over 40 years using the straight-line method.
Accumulated amortization was $1,039,000 at December 31, 1993.
NOTE 4 - DEBT
In June 1991, the Company completed the long-term financing
arrangements for its administrative services facility. Terms of
the $13,500,000 secured promissory note with Confederation Life
Insurance Company include an interest rate of 9.77%, monthly
principal and interest payments totaling $128,000 for 10 years,
and a final principal payment of $9,845,000 in 2001. A
prepayment option is available under the terms of the note;
however, the payment of a substantial premium would have been
required to retire the debt at December 31, 1993. Related debt
issuance costs of $436,000 are included in deferred expenses and
are being amortized over the life of the loan to produce an
effective annual interest rate of 10.14%.
The outstanding principal balance for this note was $12,904,000
at December 31, 1993. A fair value of $16,030,000 was estimated
based on the cost of risk-free assets that could be acquired to
extinguish the obligation at December 31, 1993.
A maximum of $20,000,000 is available to the Company under unused
bank lines of credit at December 31, 1993.
NOTE 5 - INCOME TAXES
Deferred income taxes arise from differences between taxable
income for financial statement and income tax return purposes and
are calculated using the liability method prescribed by SFAS No.
109, "Accounting for Income Taxes."
PAGE 46
T. ROWE PRICE ASSOCIATES, INC.
NOTES TO CONSOLIDATED BALANCE SHEET (Continued)
The net deferred tax liability of $2,596,000 included in income
taxes payable at December 31, 1993 consists of total deferred tax
liabilities of $5,609,000 and total deferred tax assets of
$3,013,000. Deferred tax liabilities include $2,898,000 arising
from unrealized holding gains on available-for-sale securities,
$1,353,000 arising from unrealized capital gains allocated from
the Company's partnership investments, and $677,000 from
differences in the recognition of depreciation expense. Deferred
tax assets include $1,100,000 from differences in the recognition
of the costs of the defined benefit retirement plan and
postretirement benefits.
NOTE 6 - COMMON STOCK AND EMPLOYEE STOCK INCENTIVE PLANS
Shares Authorized
At December 31, 1993, the Company had reserved 8,151,315 shares
of its unissued common stock for issuance upon the exercise of
stock options and 420,000 shares for issuance under an employee
stock purchase plan.
Share Repurchases
The Company's board of directors has authorized the future
repurchase of up to 1,432,000 common shares at December 31, 1993.
Executive Stock
At December 31, 1993, there were outstanding 1,226,540 shares of
common stock ("Executive Stock") which were sold to certain
officers of the Company in 1982 at a discount. These shares are
subject to restrictions which require payment of the discount of
$.32 per share to the Company at the earlier of the sale of such
stock or termination of employment.
PAGE 47
T. ROWE PRICE ASSOCIATES, INC.
NOTES TO CONSOLIDATED BALANCE SHEET (Continued)
Stock Incentive Plans
The following table summarizes the status of noncompensatory
stock options granted at market value to certain officers and
directors of the Company.
Options
Unexer- Options Unexer- Exer-
cised Options Granted cised cisable
Options Exer- (Canceled) Options at
Year at Decem- cised During Decem- Decem- Exer-
of ber 31, During ber 31, ber 31, ber 31, cise
Grant 1992 1993 1993 1993 1993 Price
____ ________ ________ ________ ________ ________ ______
1983-4 53,000 (30,600) -- 22,400 22,400 $.67 &
$.75
1987 309,410 (68,064) -- 241,346 241,346 $5.38 &
$9.38
1988 359,000 (66,586) -- 292,414 292,414 $7.94
1989 632,280 (46,288) (5,600) 580,392 312,404 $11.38
1990 681,500 (83,387) (11,800) 586,313 141,313 $7.19 &
$8.50
1991 811,450 (37,000) (14,000) 760,450 283,450 $17.00
1992 926,000 (11,600) (27,400) 887,000 168,600 $18.75
1993 -- -- 1,154,000 1,154,000 -- $28.13
_________ ________ _________ _________ _________
3,772,640 (343,525) 1,095,200 4,524,315 1,461,927
_________ ________ _________ _________ _________
_________ ________ _________ _________ _________
The right to exercise stock options generally vests over the
five-year period following the grant. After the tenth year
following the grant, the right to exercise the related stock
options lapses and the options are canceled.
NOTE 7 - EMPLOYEE RETIREMENT PLANS
The Company sponsors two defined contribution retirement plans:
a profit-sharing plan based on participant compensation and a
401(k) plan.
The Company also has a defined benefit plan covering those
employees whose annual base salaries do not exceed a specified
salary limit. Participant benefits are based on the final
month's base pay and years of service subsequent to January 1,
1987. The Company's funding policy is to contribute annually the
maximum amount that can be deducted for federal income tax
purposes. The following table sets forth the plan's funded
status and the amounts recognized in the Company's consolidated
balance sheet (in thousands) at December 31, 1993.
PAGE 48
T. ROWE PRICE ASSOCIATES, INC.
NOTES TO CONSOLIDATED BALANCE SHEET (Continued)
Actuarial present value of
Accumulated benefit obligation for service rendered
Vested $ 780
Non-vested 1,362
______
Total 2,142
Obligation attributable to estimated future compensation
increases 2,594
______
Projected benefit obligation 4,736
Plan assets held in sponsored mutual funds, at fair value 2,594
______
Projected benefit obligation in excess of plan assets 2,142
Unrecognized loss from decreases in discount rate 407
______
Accrued retirement costs $ 1,735
______
______
Discount rate used in determining actuarial present
values 6.40%
______
______
NOTE 8 - COMMITMENTS AND CONTINGENT LIABILITIES
The Company is a minority partner in the joint venture which owns
the land and building in which the Company leases its corporate
offices. Future minimum rental payments under the Company's
lease agreement are $3,110,000 in 1994 and 1995, $3,220,000 in
1996, $3,769,000 in 1997 and 1998, and $33,755,000 in 1999
through 2006. Other assets at December 31, 1992 includes a
receivable from the venture of $3,485,000 for leasehold
improvements made by the Company and reimbursed by the venture in
1993.
The Company leases office facilities and equipment under other
noncancelable operating leases. Future minimum rental payments
under these leases aggregate $4,621,000 in 1994, $4,123,000 in
1995, $1,776,000 in 1996, $1,259,000 in 1997, $696,000 in 1998,
and $4,806,000 in later years.
At December 31, 1993, the Company had outstanding commitments to
invest an additional $6,757,000 in various investment
partnerships and ventures.
The Company has contingent obligations at December 31, 1993 under
a $500,000 direct pay letter of credit expiring not later than
1999 and a $780,000 standby letter of credit which is renewable
annually.
PAGE 49
T. ROWE PRICE ASSOCIATES, INC.
NOTES TO CONSOLIDATED BALANCE SHEET (Continued)
Consolidated stockholders' equity at December 31, 1993 includes
$32,635,000 which is restricted as to use under various
regulations and agreements to which the Company and its
subsidiaries are subject in the ordinary course of business.
From time to time, the Company is a party to various employment-
related claims, including claims of discrimination, before
federal, state and local administrative agencies and courts. The
Company vigorously defends itself against these claims. In the
opinion of management, after consultation with counsel, it is
unlikely that any adverse determination in one or more pending
employment-related claims would have a material adverse effect on
the Company's financial position.
[/TEXT]
[/DOCUMENT]
</DOCUMENT
PAGE 4
T. ROWE PRICE (LOGO) PROXY
_______________________________________________________________
INSTRUCTIONS:
1. Cast your vote by checking the appropriate boxes on the
reverse side. If you do not check a box, your vote will be
cast FOR that proposal.
2. Sign and date the card below.
3. Please return the signed card promptly using the enclosed
postage paid envelope, even if you will be attending the
meeting.
4. Please do not enclose checks or any other correspondence.
Please fold and detach card at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
T. ROWE PRICE BLUE CHIP GROWTH FUND, INC.
MEETING: 9:30 A.M. EASTERN TIME
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas H. Broadus, Jr. and James
S. Riepe, as proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote,
as designated below, all shares of stock of the Fund, which the
undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held on Wednesday, April 20, 1994, at the time
indicated above, at the offices of the Fund, 100 East Pratt
Street, Baltimore, Maryland 21202, and at any and all
adjournments thereof, with respect to the matters set forth below
and described in the Notice of Annual Meeting and Proxy Statement
dated March ___, 1994, receipt of which is hereby acknowledged.
Please sign exactly as name
appears. Only authorized officers
should sign for corporations. For
information as to the voting of
stock registered in more than one
name, see page ___ of the Notice of
Annual Meeting and Proxy Statement.
Dated: __________________, 1994
___________________________________
___________________________________
Signature(s)
CUSIP#77954Q106/fund#093
(Front)
PAGE 5
T. ROWE PRICE (LOGO) WE NEED YOUR PROXY VOTE BEFORE APRIL 20,
1994
_________________________________________________________________
Please refer to the Proxy Statement discussion of each of these
matters.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
Please fold and detach card at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
1. Election of FOR all nominees / /WITHHOLD AUTHORITY / /1.
directors. listed below (except to vote for all
as marked to the nominees listed below
contrary)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL
NOMINEE STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST
BELOW.)
Leo C. Bailey Thomas H. Broadus, Jr. Donald W. Dick, Jr.
David K. Fagin Addison Lanier John K. Major Hanne M. Merriman
James S. Riepe M. David Testa Hubert D. Vos Paul M. Wythes
2. Approve changes to the Fund's fundamental policies.
FOR each policy / / ABSTAIN / / 2.
listed below (except as
marked to the contrary)
PLEASE CHECK THE BOX FOR any policy change you do NOT
(underscored) wish to approve:
/ / / / / / / /
A B C D
3. Ratify the selection of Price Watershouse as independent
accountants. FOR / / AGAINST / / ABSTAIN / / 3.
4. I authorize the Proxies, in their discretion, to vote upon
such other business as may properly come before the meeting.
CUSIP#77954Q106/fund#093
(BACK)