-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VX3lsQGDwnOm5cpD4JIDrO2p7SAfR5dtF5OIoYQ8AR8M4Velu14EUBSNqM+ppXhl D0/2C1n4VDGSW6vqy0jHQQ== 0000902259-99-000012.txt : 19990806 0000902259-99-000012.hdr.sgml : 19990806 ACCESSION NUMBER: 0000902259-99-000012 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE BLUE CHIP GROWTH FUND INC CENTRAL INDEX KEY: 0000902259 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07059 FILM NUMBER: 99678186 BUSINESS ADDRESS: STREET 1: C/O T ROWE PRICE ASSOCIATES INC STREET 2: 100 EAST E PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 4105472000 N-30D 1 BLUE CHIP GROWTH FUND - -------------------------------------------------------------------------------- T. Rowe Price - -------------------------------------------------------------------------------- Semiannual Report Blue Chip Growth Fund - -------------------------------------------------------------------------------- June 30, 1999 - -------------------------------------------------------------------------------- REPORT HIGHLIGHTS ================================================================================ BLUE CHIP GROWTH FUND - --------------------- * Strong economic growth and emerging inflation fears pushed up interest rates and helped cyclicals outperform steady growth stocks. * The fund posted strong gains, although it modestly trailed the S&P 500 and its peer group average. * Although the fund did not benefit from the market shift to cyclicals, its technology, media, and telecommunications holdings performed well. * Valuations in our market remain high, but excellent corporate earnings and a favorable investing environment could lead to continued stock gains. ================================================================================ FELLOW SHAREHOLDERS ================================================================================ The first half of 1999 saw a significant shift in investor sentiment. Stability returned to Asia and other foreign economies, but as the U.S. economy thrived, the threat of inflation intensified. Interest rates rose across the board during the period, and the Federal Reserve made one increase in the federal funds target rate on June 30. Yet investors remained positive on the earnings outlook for many companies, and stocks posted solid gains. ================================================================================ PERFORMANCE COMPARISON ================================================================================ Periods Ended 6/30/99 6 Months 12 Months --------------------- -------- --------- Blue Chip Growth Fund 9.84% 20.48% S&P500 12.38 22.76 Lipper Growth Funds Average 11.65 18.87 ================================================================================ In this environment, your fund continued to perform reasonably well, generating solid gains over the past year as well as over the three- and five-year periods. However, for the six months ended June 30, the fund trailed its peer group average and the unmanaged Standard & Poor's 500 Stock Index. Performance during this period was somewhat lackluster as cyclical, energy, and technology stocks surged (and pharmaceutical and financial stocks underperformed) in the robust economic environment. It is worth noting that small- and mid-cap stocks outpaced large-caps in the second quarter -- an unusual occurrence during the past several years. For the 12-month period, your fund surpassed the peer group average but lagged the S&P 500. ================================================================================ MARKET ENVIRONMENT ================================================================================ Once again, we learned that the market environment and investor perceptions can turn on a dime. Six months ago, investors were preoccupied with problems in Asian and Latin American economies, the Long-Term Capital hedge fund, global deflation, and recession. Investors also feared that a general slowdown in economic activity and a flood of cheap imports due to the devaluation of foreign currencies would result in severe pricing pressures and problematic deflation in the U.S., particularly in many commodity-based industries. As 1999 progressed, however, investors seemed more concerned that improved growth in foreign economies, coupled with buoyant U.S. growth, could lead to meaningful increases in inflation. Inflation concerns were aggravated by a sharp rise in oil prices. Oil essentially doubled from $10 to $20 per barrel over the last few months due to efforts by OPEC to limit production. These pressures helped produce some increases in inflation although the most recent consumer price index data showed no increase. Interest rates rose significantly to reflect inflation fears, with the 30-year Treasury bond yield increasing from 5% to around 6% during the period. Yet the Federal Reserve (and investors) had to grapple with conflicting data. In addition to the rise in energy prices and the strength of economic data, labor markets were very tight and average hourly wages rose. On the other hand, productivity continued to improve and inflation reports were inconsistent but generally favorable. Growth could moderate if the increase in rates slows the housing market and if consumers cease spending in excess of disposable personal income. The Fed has also taken note of the dramatic growth of the Internet and its favorable effect on price competition and efficiency. INFORMATION ON YEAR-END DISTRIBUTIONS ------------------------------------- To help you with tax planning, we try to give you a good idea of the per-share income and capital gain amounts our funds may distribute near year-end. In late October, we will provide estimates of these amounts, which will be paid on December 16, 1999, to shareholders of record on December 14. These preliminary numbers will be included in The Price Report mailing to shareholders in late October and will also be available on our Web site - www.troweprice.com. We hope that these preliminary numbers will be useful to you in approximating the income and capital gains taxes you may pay on distributions to taxable accounts. If your fund distributed any capital gains earlier in 1999, you can find the amounts on your statements and should include them in your tax planning calculations. Please keep in mind that the numbers are not final and are likely to be revised before the December 14 declaration and record date. As the fall progresses, you may want to check our Web site for revisions. If you would like information on tax matters relating to mutual funds, please visit our Web site to download our Insights report, Tax Information for Mutual Fund Investors, or call 1-800-225-5132 to request a copy. ============================================= Investors reacted by bidding up the value of cyclical and technology stocks, which should fare well in a technology-driven economic upswing. Meanwhile, the stocks of more defensive steady-growth companies, such as pharmaceuticals, and interest rate sensitive stocks, such as financials, generally struggled. Earnings were once again a critical component of performance: generally speaking, quarterly earnings among the blue chips met or exceeded expectations, but investors continued to punish stocks that missed their targets even by small amounts. PORTFOLIO REVIEW Your fund has less exposure to the technology sector than the average growth fund, and technology holdings performed very well in the first half of 1999. However, we did have several investments that participated in the tech stock rally. MICROSOFT, AMERICA ONLINE, HEWLETT-PACKARD, TEXAS INSTRUMENTS, and CISCO SYSTEMS were all among the top 10 contributors to performance in the first half. ASCEND COMMUNICATIONS, recently acquired by LUCENT TECHNOLOGIES, MAXIM INTEGRATED PRODUCTS, a leading maker of analog semiconductors, BMC Software, a software provider for mainframe computers, Sun Microsystems, and EMC, a data storage equipment and software firm, were also stellar performers. Telecommunication stocks also added meaningfully to returns. MCI WORLDCOM made progress toward integrating MCI and produced strong operating results: it was a top-10 contributor to performance. Long time holding AIRTOUCH COMMUNICATIONS augmented results when it merged with Vodaphone to form the largest global cellular telephone service provider. NOKIA, the Finnish maker of cellular handsets and telecom infrastructure, continued to take market share from rivals and its stock appreciated sharply. TELLABS, a supplier of cross connects and other telecom switching gear, continued to post strong growth. Its new product offerings in the optical switching area have also caused investors to bid the stock higher. ALLTEL, among the largest providers of cellular and local phone service in the Southeast, has been a strong, steady grower -- the company has a multi-decade record of dividend increases -- and continued to help your fund's performance. Although rising interest rates dampened the gains of many financial stocks, some companies in this area rallied in the second quarter and ultimately were top-flight performers. CITIGROUP was our top contributor. This company has been a major holding since the fund's inception in 1993, and we are pleased to have added to the position consistently, particularly when the stock was very much out of favor in the second half of 1998. CAPITAL ONE, a rapidly growing provider of credit card financing and services, generated high-quality earnings growth and strong stock performance. Long time holdings BANKAMERICA (the successor to Nationsbank) and AMERICAN EXPRESS created some anxiety with investors as the Asian crisis and new business initiatives challenged their growth. However, earnings prospects have improved and the stocks have appreciated slowly but steadily. Although your fund does not own many industrial/ cyclical stocks, three positions in this area were noteworthy contributors. Top-10 holding Tyco International, which we have written about in previous reports, did very well and now has a market value of over $80 billion. ALLIEDSIGNAL rewarded our patience as its stock has periodically been a mediocre performer over the last several years, but soared in the first half of 1999 and was our fifth best stock. CORNING has also been inconsistent, but its dominance of the markets for glass fiber and other equipment used in telecommunications is now bearing fruit. [Sector Diversification pie chart here showing (based on net assets as of 6/30/99): Business services and transportation, 12%. Capital equipment and process industries, 7%. Technology, 17%. Consumer services and consumer cyclicals, 18%. Financial, 20%. Energy and utilities, 5%. Consumer nondurables, 19%. Reserves, 2%.] Although they weren't the largest story of the first half, entertainment and media stocks also did well. CBS, a major television and radio operator, was an important contributor to fund performance. Its Infinity broadcasting unit controls the former Westinghouse radio broadcasting group and has the dominant position in most urban markets. Management has also been able to steer the television group to the top of the network rankings while also establishing important interests in various Internet-based businesses and companies. Media giant TIME WARNER, with significant cable interests, and MEDIAONE GROUP, a top cable and media operator that agreed to be acquired by AT&T, were also outstanding. As always, some stocks produced disappointing results. NETWORK ASSOCIATES was our largest loser. The company is the leading provider of virus control and other data security software. It had a consistent, multiyear record of internal growth and had grown rapidly through acquisition. However, it appeared to have trouble effectively managing all of its acquired businesses, and strong competitors began to challenge it in the lucrative area of data security. The company missed its earnings growth targets, and management does not appear to be in control of the problems. Because we lost confidence in management and the competition in this area is growing more intense, we eliminated the position. MCKESSONHBOC faced a similar situation. The management of McKesson, a drug distributor, championed its purchase of HBOC, which produces health care information systems to hospitals and other health care providers, claiming that the combination would rapidly create solutions to help lower health care costs. In our opinion, the strategy has some merit. Unfortunately, it appears to us that HBOC was a motivated and dishonest seller of its business. It improperly recorded revenues on several software contracts, and the managements of both HBOC and McKesson have now been removed by the board. Fortunately, because our analyst was concerned that year 2000 issues would meaningfully slow the firm's software installations, we sold a substantial portion of our position before its sharp decline. After analyzing the situation, we concluded that the problems would take some time to fix (and we did not know the new management well enough to have confidence in them). Thus, we sold the rest of our position at prices well above the current price. ================================================================================ STRATEGY ================================================================================ Our investment strategy continued to focus on maintaining positions in core holdings as long as the fundamentals remain strong and the valuations are reasonable. Consequently, much of the substantial cash flow the fund has received continued to be invested opportunistically in existing holdings. For example, additions to FREDDIE MAC, Microsoft, Citigroup, Ascend Communications (now Lucent), MediaOne Group, PFIZER, and INTEL were significant enough to be included in the 10 largest purchases of the fund for the past six months. However, we did establish some new major positions. MARSH & MCLENNAN is the leading insurance brokerage operation in the world and also has a significant stake in asset management (Putnam) and consulting (Mercer). The company is very profitable with top-tier return on equity and also possesses a strong long-term earnings and dividend growth record. The stock has been strong since our purchase. As noted earlier, Corning has stumbled from time to time, but its long-term growth record is well above average (strong double-digit growth over the last 20 years). More important, management has sold consumer businesses with lower returns to focus its time, energy, and substantial research spending on new telecom products. Its LEAF fiber is state of the art and is being adopted by most of the major telecom carriers that are installing fiber networks. The company is well positioned to participate as the telecom area expands. NIKE has been a less satisfying new purchase. The earnings outlook for the company is quite good, and continued improvement in foreign economies should ensure that the earnings rebound is sustainable. However, the company's apparel business is struggling as management eliminates excess inventory and streamlines its product offerings. Although the company is highly profitable and a leader in its businesses, we are reluctant to increase our modest position until we obtain further evidence that the apparel business will not offset the powerful improvement under way in the footwear operations. ================================================================================ OUTLOOK ================================================================================ Currently, the market appears to face the risk that a synchronized global economic boom will lead to sharp increases in inflation and interest rates. However, just six months ago, the fear was that global recession and deflation would crush corporate earnings. The fleeting nature of market perception is why we limit time spent on economic prediction and focus on finding solid companies with above-average growth prospects. This is where we believe we have some expertise and where we feel we can add the most value, particularly if those who focus on economic predictions and sector rotation sell growth companies at reasonable valuations because their sector is out of favor. =================================== The fleeting nature of market perception is why we limit time spent on economic prediction and focus on finding solid companies with above-average growth prospects. =================================== However, as we have noted in previous letters, the most serious challenge to continued gains may be that stocks have performed so well. Said another way, even some of the "out of favor" sectors in which we have been purchasing stocks (pharmaceuticals, financials) are not cheap by historical absolute standards. However, sound investing must take into account the outlook for the general investment environment, future company earnings, and an assessment of reasonable valuations. Considering these factors, we believe the outlook for U.S. stocks and your fund remains favorable: * Inflation and interest rate data remain attractive. Despite inflation concerns, data continue to support the thesis that the economy is growing at a manageable pace. * Earnings growth is very strong at many high-quality U.S. companies, and the valuations of selected companies remain reasonable. The rotation toward cyclicals has created especially interesting opportunities in some high-quality growth stocks. * The blue chip universe is fortunate to have numerous top-notch, entrepreneurial management teams implementing sound business models. Many of these teams have improved the competitiveness of their businesses as well as the durability and predictability of earnings. * Many of our holdings generate significant free cash flow, and shareholder-oriented managements typically use this cash to repurchase shares or make acquisitions in a manner that might enhance stock performance over time. This may prove to be particularly advantageous if a challenging environment causes stock weakness for these companies or potential acquisitions. As always, we seek blue chip companies with leading market positions, seasoned management, and strong financial fundamentals that can generate earnings growth regardless of the economic or interest rate environment. We believe we can enhance returns and lower risk over time by investing in such "all season" growth companies especially when they are at reasonable valuations. Although the market may not always go up, we continue to believe that this strategy will provide highly attractive investment results over time. We appreciate your continued support in this endeavor. Respectfully submitted, /s/ Larry J. Puglia President and Chairman of the Investment Advisory Committee July 22, 1999 ================================================================================ T. Rowe Price Blue Chip Growth Fund ================================================================================ TWENTY-FIVE LARGEST HOLDINGS - ---------------------------- Portfolio Highlights Percent of Net Assets 6/30/99 - -------------------------------------------------------------------- Citigroup 2.9% - -------------------------------------------------------------------- Tyco International 2.8 - -------------------------------------------------------------------- Microsoft 2.7 - -------------------------------------------------------------------- MCI WorldCom 2.4 - -------------------------------------------------------------------- Freddie Mac 2.4 - -------------------------------------------------------------------- Bristol-Myers Squibb 1.9 - -------------------------------------------------------------------- Wells Fargo 1.7 - -------------------------------------------------------------------- AlliedSignal 1.5 - -------------------------------------------------------------------- GE 1.5 - -------------------------------------------------------------------- United HealthCare 1.5 - -------------------------------------------------------------------- Pfizer 1.4 - -------------------------------------------------------------------- Intel 1.4 - -------------------------------------------------------------------- Merck 1.4 - -------------------------------------------------------------------- Time Warner 1.4 - -------------------------------------------------------------------- Waste Management 1.3 - -------------------------------------------------------------------- Bank of America 1.3 - -------------------------------------------------------------------- Warner-Lambert 1.3 - -------------------------------------------------------------------- Safeway 1.3 - -------------------------------------------------------------------- CBS 1.3 - -------------------------------------------------------------------- Hewlett-Packard 1.3 - -------------------------------------------------------------------- Fannie Mae 1.2 - -------------------------------------------------------------------- BMC Software 1.2 - -------------------------------------------------------------------- Wal-Mart 1.2 - -------------------------------------------------------------------- Danaher 1.2 - -------------------------------------------------------------------- Mobil 1.1 - -------------------------------------------------------------------- Total 40.6% Note: Table excludes reserves. ================================================================================ T. Rowe Price Blue Chip Growth Fund - ----------------------------------- Portfolio Highlights MAJOR PORTFOLIO CHANGES - ----------------------- Listed in descending order of size 6 Months Ended 6/30/99 - ---------------------- Freddie Mac McKessonHBOC ** - ---------------------------------------------------------------------------- Microsoft AT&T ** - ---------------------------------------------------------------------------- Citigroup First Union ** - ---------------------------------------------------------------------------- Ascend Communications America Online - ---------------------------------------------------------------------------- Marsh & McLennan * Sara Lee ** - ---------------------------------------------------------------------------- MediaOne Group SBCCommunications - ---------------------------------------------------------------------------- Corning * Newell Rubbermaid - ---------------------------------------------------------------------------- NIKE* Nokia - ---------------------------------------------------------------------------- Pfizer Oracle - ---------------------------------------------------------------------------- Intel Guidant ** - -------------------------------------------------------------------------------- * Position added ** Position eliminated ================================================================================ T. Rowe Price Blue Chip Growth Fund - ----------------------------------- PERFORMANCE COMPARISON - ---------------------- This chart shows the value of a hypothetical $10,000 investment in the fund over the past 10 fiscal year periods or since inception (for funds lacking 10-year records). The result is compared with a broad-based average or index. An index return does not reflect expenses, which have been deducted from the fund's return. [SEC chart for Blue Chip Growth shown here] AVERAGE ANNUAL COMPOUND TOTAL RETURN - ------------------------------------ This table shows how the fund would have performed each year if its actual (or cumulative) returns for the periods shown had been earned at a constant rate. Since Inception Periods Ended 6/30/99 1 Year 3 Years 5 Years Inception Date - --------------------- ------ ------- ------- --------- ---- Blue Chip Growth Fund 20.48% 27.50% 27.15% 24.17% 6/30/93 Investment return and principal value represent past performance and will vary. Shares may be worth more or less at redemption than at original purchase. ================================================================================ T. Rowe Price Blue Chip Growth Fund - ----------------------------------- Unaudited For a share outstanding throughout each period FINANCIAL HIGHLIGHTS - -------------------- 6 Months Year Ended Ended 6/30/99 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94 ----------------------------------------------------- NET ASSET VALUE Beginning of period $ 30.60 $ 24.17 $ 19.06 $15.09 $11.11 $11.24 - ------------------------------------------------------------------------------- Investment activities Net investment income 0.03 0.11 0.13 0.14 0.16* 0.12* Net realized and unrealized gain (loss) 2.98 6.82 5.12 4.05 4.05 (0.03) - ------------------------------------------------------------------------------- Total from investment activities 3.01 6.93 5.25 4.19 4.21 0.09 - ------------------------------------------------------------------------------- Distributions Net investment income - (0.11) (0.12) (0.14) (0.15) (0.10) Net realized gain - (0.39) (0.02) (0.08) (0.08) (0.12) - ------------------------------------------------------------------------------- Total distributions - (0.50) (0.14) (0.22) (0.23) (0.22) - ------------------------------------------------------------------------------- NET ASSET VALUE =============================================================================== End of period $ 33.61 $ 30.60 $ 24.17 $ 19.06 $15.09 $11.11 Ratios/Supplemental Data Total return** 9.84% 28.84% 27.56% 27.75% 37.90%* 0.80%* - ------------------------------------------------------------------------------- Ratio of total expenses to average net assets 0.92%+ 0.91% 0.95% 1.12% 1.25%* 1.25%* - ------------------------------------------------------------------------------- Ratio of net investment income to average net assets 0.19%+ 0.43% 0.86% 0.87% 1.27%* 1.05%* - ------------------------------------------------------------------------------- Portfolio turnover rate 40.6%+ 34.5% 23.7% 26.3% 38.1% 75.0% - ------------------------------------------------------------------------------- Net assets, end of period (in millions) $ 5,804 $ 4,330 $ 2,345 $ 540 $ 146 $ 39 - ------------------------------------------------------------------------------- ** Total return reflects the rate that an investor would have earned on an investment in the fund during each period, assuming reinvestment of all distributions. * Excludes expenses in excess of a 1.25% voluntary expense limitation in effect through 12/31/96. + Annualized The accompanying notes are an integral part of these financial statements. =========================================================================== T. Rowe Price Blue Chip Growth Fund - ----------------------------------- Unaudited June 30, 1999 Statement of Net Assets Shares Value In thousands Common Stocks 97.7% - ------------------- FINANCIAL 19.6% - --------------- Bank and Trust 6.4% Bank of America 1,060,000 $ 77,711 - ------------------------------------------------------------------------------ Bank of New York 1,700,000 62,369 - ------------------------------------------------------------------------------ Bank One 100,000 5,956 - ------------------------------------------------------------------------------ Chase Manhattan 485,000 42,013 - ------------------------------------------------------------------------------ Mellon Bank 1,700,000 61,838 - ------------------------------------------------------------------------------ State Street 250,000 21,344 - ------------------------------------------------------------------------------ Wells Fargo 2,375,000 101,531 - ------------------------------------------------------------------------------ 372,762 - ------------------------------------------------------------------------------ INSURANCE 3.3% ACE Limited 1,100,000 31,075 - ------------------------------------------------------------------------------ American International Group 170,000 19,901 - ------------------------------------------------------------------------------ Fairfax Financial (CAD) * 61,100 16,390 - ------------------------------------------------------------------------------ Marsh & McLennan 520,000 39,260 - ------------------------------------------------------------------------------ Travelers Property Casualty (Class A) 640,000 25,040 - ------------------------------------------------------------------------------ UNUM 440,000 24,090 - ------------------------------------------------------------------------------ XL Capital (Class A) 622,300 35,160 - ------------------------------------------------------------------------------ 190,916 - ------------------------------------------------------------------------------ Financial Services 9.9% American Express 470,000 61,159 - ------------------------------------------------------------------------------ Associates First Capital (Class A) 1,030,000 45,642 - ------------------------------------------------------------------------------ Capital One Financial 825,000 45,942 - ------------------------------------------------------------------------------ Citigroup 3,535,748 167,948 - ------------------------------------------------------------------------------ Fannie Mae 1,060,000 72,477 - ------------------------------------------------------------------------------ Freddie Mac 2,375,000 137,750 - ------------------------------------------------------------------------------ Goldman Sachs Group * 121,300 8,764 - ------------------------------------------------------------------------------ Morgan Stanley Dean Witter 310,000 31,775 - ------------------------------------------------------------------------------ 571,457 - ------------------------------------------------------------------------------ Total Financial 1,135,135 - ------------------------------------------------------------------------------ =UTILITIES==1.8%============================================================== Telephone 1.8% ALLTEL 463,300 33,126 - ------------------------------------------------------------------------------ GTE 300,000 22,725 - ------------------------------------------------------------------------------ SBC Communications 700,000 $ 40,600 - ------------------------------------------------------------------------------ Sprint 200,000 10,562 - ------------------------------------------------------------------------------ Total Utilities 107,013 - ------------------------------------------------------------------------------ =CONSUMER=NONDURABLES==19.2%================================================== Cosmetics 0.2% Gillette 350,000 14,350 - ------------------------------------------------------------------------------ 14,350 - ------------------------------------------------------------------------------ Beverages 1.0% Coca-Cola 140,000 8,750 - ------------------------------------------------------------------------------ PepsiCo 1,300,000 50,294 - ------------------------------------------------------------------------------ 59,044 - ------------------------------------------------------------------------------ Food Processing 0.4% Heinz 500,000 25,063 - ------------------------------------------------------------------------------ 25,063 - ------------------------------------------------------------------------------ Hospital Supplies/Hospital Management 1.2 Baxter International 300,000 18,188 - ------------------------------------------------------------------------------ Boston Scientific * 691,900 30,400 - ------------------------------------------------------------------------------ Medtronic 25,000 1,947 - ------------------------------------------------------------------------------ Wellpoint Health Networks * 200,000 16,975 - ------------------------------------------------------------------------------ 67,510 - ------------------------------------------------------------------------------ Pharmaceuticals 10.7% American Home Products 880,000 50,600 - ------------------------------------------------------------------------------ Amgen * 300,000 18,253 - ------------------------------------------------------------------------------ Biogen * 470,000 30,242 - ------------------------------------------------------------------------------ Bristol-Myers Squibb 1,565,000 110,235 - ------------------------------------------------------------------------------ Eli Lilly 700,000 50,137 - ------------------------------------------------------------------------------ Johnson & Johnson 640,000 62,720 - ------------------------------------------------------------------------------ Merck 1,090,000 80,660 - ------------------------------------------------------------------------------ Pfizer 740,000 81,215 - ------------------------------------------------------------------------------ Schering-Plough 1,120,000 59,360 - ------------------------------------------------------------------------------ Warner-Lambert 1,100,000 76,312 - ------------------------------------------------------------------------------ 619,734 - ------------------------------------------------------------------------------ Health Care Services 2.3% Aetna 325,000 29,067 - ------------------------------------------------------------------------------ CIGNA 185,000 16,465 - ------------------------------------------------------------------------------ United HealthCare 1,360,000 85,170 - ------------------------------------------------------------------------------ 130,702 - ------------------------------------------------------------------------------ Miscellaneous Consumer Products 3.4% Colgate-Palmolive 200,000 $ 19,750 - ------------------------------------------------------------------------------ Hasbro 1,060,000 29,614 - ------------------------------------------------------------------------------ Mattel 860,000 22,736 - ------------------------------------------------------------------------------ Newell Rubbermaid 250,000 11,625 - ------------------------------------------------------------------------------ NIKE (Class B) 550,000 34,822 - ------------------------------------------------------------------------------ Philip Morris 1,180,000 47,421 - ------------------------------------------------------------------------------ Procter & Gamble 340,000 30,345 - ------------------------------------------------------------------------------ 196,313 - ------------------------------------------------------------------------------ Total Consumer Nondurables 1,112,716 - ------------------------------------------------------------------------------ =CONSUMER=SERVICES==14.8%===================================================== General Merchandisers 2.1% Dayton Hudson 340,000 22,100 - ------------------------------------------------------------------------------ Saks * 820,000 23,677 - ------------------------------------------------------------------------------ Wal-Mart 1,420,000 68,515 - ------------------------------------------------------------------------------ Warnaco Group (Class A) 300,000 8,025 - ------------------------------------------------------------------------------ 122,317 - ------------------------------------------------------------------------------ Specialty Merchandisers 4.5% CVS 1,120,524 56,867 - ------------------------------------------------------------------------------ Federated Department Stores * 140,000 7,411 - ------------------------------------------------------------------------------ Home Depot 880,000 56,705 - ------------------------------------------------------------------------------ Kroger * 2,240,000 62,580 - ----------------------------------------------------------------------------- Safeway * 1,540,000 76,230 - ----------------------------------------------------------------------------- 259,793 - ----------------------------------------------------------------------------- Entertainment and Leisure 2.2% Carnival (Class A) 370,000 17,945 - ----------------------------------------------------------------------------- Disney 250,000 7,703 - ----------------------------------------------------------------------------- McDonald's 1,012,000 41,808 - ----------------------------------------------------------------------------- MediaOne * 820,000 60,988 - ----------------------------------------------------------------------------- 128,444 - ----------------------------------------------------------------------------- Media and Communications 6.0% CBS * 1,700,000 73,844 - ----------------------------------------------------------------------------- Clear Channel Communications * 590,000 40,673 - ----------------------------------------------------------------------------- Fox Entertainment Group (Class A) * 1,270,000 34,211 - ----------------------------------------------------------------------------- Infinity Broadcasting (Class A) * 1,300,000 38,675 - ----------------------------------------------------------------------------- Time Warner 1,090,000 80,115 - ----------------------------------------------------------------------------- Tribune 385,000 33,543 - ----------------------------------------------------------------------------- Vodafone ADR 235,000 $ 46,295 - ----------------------------------------------------------------------------- 347,356 - ----------------------------------------------------------------------------- Total Consumer Services 857,910 - ----------------------------------------------------------------------------- =CONSUMER=CYCLICALS==2.7%==================================================== Automobiles and Related 0.6% SPX * 400,000 33,400 - ----------------------------------------------------------------------------- 33,400 - ----------------------------------------------------------------------------- Building and Real Estate 0.5% Starwood Hotels & Resorts, REIT 1,060,000 32,396 - ----------------------------------------------------------------------------- 32,396 - ----------------------------------------------------------------------------- Miscellaneous Consumer Durables 1.6% Corning 610,000 42,776 - ----------------------------------------------------------------------------- Eastman Kodak 250,000 16,938 - ----------------------------------------------------------------------------- Masco 1,120,000 32,340 - ----------------------------------------------------------------------------- 92,054 - ----------------------------------------------------------------------------- Total Consumer Cyclicals 157,850 - ----------------------------------------------------------------------------- =TECHNOLOGY==16.6%=========================================================== Electronic Components 5.1% Altera * 550,000 20,230 - ------------------------------------------------------------------------------ EMC * 590,000 32,450 - ------------------------------------------------------------------------------ Intel 1,360,000 80,877 - ------------------------------------------------------------------------------ Linear Technology 200,000 13,463 - ------------------------------------------------------------------------------ Maxim Integrated Products * 550,000 36,575 - ------------------------------------------------------------------------------ Motorola 310,000 29,372 - ------------------------------------------------------------------------------ Texas Instruments 356,000 51,620 - ------------------------------------------------------------------------------ Xilinx * 520,000 29,786 - ------------------------------------------------------------------------------ 294,373 - ------------------------------------------------------------------------------ Electronic Systems 2.8% Applied Materials * 470,000 34,707 - ------------------------------------------------------------------------------ Hewlett-Packard 730,000 73,365 - ------------------------------------------------------------------------------ Nokia ADR 325,000 29,758 - ------------------------------------------------------------------------------ Solectron * 380,000 25,341 - ------------------------------------------------------------------------------ 163,171 - ------------------------------------------------------------------------------ Information Processing 1.1% Dell Computer * 910,000 33,642 - ------------------------------------------------------------------------------ IBM 262,000 33,863 - ------------------------------------------------------------------------------ 67,505 - ------------------------------------------------------------------------------ Office Automation 0.2% Ceridian * 400,000 $ 13,075 - ------------------------------------------------------------------------------ 13,075 - ------------------------------------------------------------------------------ Specialized Computer 0.6% Sun Microsystems * 475,000 32,731 - ------------------------------------------------------------------------------ 32,731 - ------------------------------------------------------------------------------ Telecommunications Equipment 5.0% Cisco Systems * 1,000,000 64,406 - ------------------------------------------------------------------------------ Lucent Technologies 843,150 56,860 - ------------------------------------------------------------------------------ MCI WorldCom * 1,650,000 141,951 - ------------------------------------------------------------------------------ Tellabs * 380,000 25,686 - ------------------------------------------------------------------------------ 288,903 - ------------------------------------------------------------------------------ Aerospace and Defense 1.8% AlliedSignal 1,400,000 88,200 - ------------------------------------------------------------------------------ Raytheon (Class B) 210,000 14,779 - ------------------------------------------------------------------------------ 102,979 - ------------------------------------------------------------------------------ Total Technology 962,737 - ------------------------------------------------------------------------------ =CAPITAL=EQUIPMENT==5.5%====================================================== Electrical Equipment 4.3% GE 770,000 87,010 - ------------------------------------------------------------------------------ Tyco International 1,730,331 163,949 - ------------------------------------------------------------------------------ 250,959 - ------------------------------------------------------------------------------ Machinery 1.2% Danaher 1,150,000 66,843 - ------------------------------------------------------------------------------ 66,843 - ------------------------------------------------------------------------------ Total Capital Equipment 317,802 - ------------------------------------------------------------------------------ =BUSINESS=SERVICES=AND=TRANSPORTATION==12.2% Computer Service and Software 8.4% America Online * 412,000 45,526 - ------------------------------------------------------------------------------ Automatic Data Processing 1,000,000 44,000 - ------------------------------------------------------------------------------ BMC Software * 1,300,000 70,159 - ------------------------------------------------------------------------------ Compuware * 950,000 30,192 - ------------------------------------------------------------------------------ First Data 1,045,106 51,145 - ------------------------------------------------------------------------------ Galileo International 640,700 34,238 - ------------------------------------------------------------------------------ Microsoft * 1,735,000 156,367 - ------------------------------------------------------------------------------ Oracle * 440,000 16,335 - ------------------------------------------------------------------------------ Parametric Technology * 1,500,000 $ 20,859 - ------------------------------------------------------------------------------ SunGard Data Systems * 500,000 17,250 - ------------------------------------------------------------------------------ 486,071 - ------------------------------------------------------------------------------ Distribution Services 0.7% Cardinal Health 470,630 30,179 - ------------------------------------------------------------------------------ U.S. Foodservice * 300,620 12,814 - ------------------------------------------------------------------------------ 42,993 - ------------------------------------------------------------------------------ Miscellaneous Business Services 3.1% Cendant * 500,000 10,250 - ------------------------------------------------------------------------------ Equifax 200,000 7,138 - ------------------------------------------------------------------------------ H&R Block 600,000 30,000 - ------------------------------------------------------------------------------ Omnicom 650,000 52,000 - ------------------------------------------------------------------------------ Waste Management 1,450,000 77,937 - ------------------------------------------------------------------------------ 177,325 - ------------------------------------------------------------------------------ Total Business Services and Transportation 706,389 =ENERGY==3.0% Energy Services 0.5% Halliburton 700,000 31,675 - ------------------------------------------------------------------------------ 31,675 - ------------------------------------------------------------------------------ Integrated Petroleum - International 2.5% BP Amoco ADR 361,000 39,168 - ------------------------------------------------------------------------------ Chevron 416,000 39,598 - ------------------------------------------------------------------------------ Mobil 667,000 66,033 - ------------------------------------------------------------------------------ 144,799 - ------------------------------------------------------------------------------ Total Energy 176,474 =PROCESS=INDUSTRIES==1.1% Specialty Chemicals 0.3% Great Lakes Chemical 415,000 19,116 - ------------------------------------------------------------------------------ 19,116 - ------------------------------------------------------------------------------ Paper and Paper Products 0.8% Kimberly-Clark 770,000 43,890 - ------------------------------------------------------------------------------ 43,890 - ------------------------------------------------------------------------------ Total Process Industries 63,006 =MISCELLANEOUS==1.2% Conglomerates 0.2% Berkshire Hathaway (Class A) * 200 $ 13,780 - ------------------------------------------------------------------------------ 13,780 - ------------------------------------------------------------------------------ Other Miscellaneous Common Stocks 1.0% 58,873 - ------------------------------------------------------------------------------ Total Miscellaneous 72,653 - ------------------------------------------------------------------------------ ============================================================================== Total Common Stocks (Cost $4,118,053) 5,669,685 ============================================================================== =SHORT-TERM=INVESTMENTS==2.8% Money Market Funds 2.8% Reserve Investment Fund, 5.05% + # 166,466,524 166,467 Total Short-Term Investments (Cost $166,467) 166,467 =Total=Investments=in=Securities 100.5% of Net Assets (Cost $4,284,520) $ 5,836,152 Other Assets Less Liabilities (31,693) NET ASSETS $ 5,804,459 Net Assets Consist of: Accumulated net investment income - net of distributions $ 4,884 Accumulated net realized gain/loss - net of distributions 83,538 Net unrealized gain (loss) 1,551,632 Paid-in-capital applicable to 172,712,800 shares of $0.0001 par value capital stock outstanding; 1,000,000,000 shares authorized 4,164,405 NET ASSETS $ 5,804,459 NET ASSET VALUE PER SHARE $ 33.61 # Seven-day yield + Affiliated company * Non-income producing ADR American Depository Receipt CAD Canadian dollar The accompanying notes are an integral part of these financial statements. ================================================================================ T. Rowe Price Blue Chip Growth Fund Unaudited Statement of Operations In thousands 6 Months Ended 6/30/99 ==Investment=Income========================================== Income Dividend $ 21,170 Interest (including $6,912 from affiliated companies) 6,915 - ------------------------------------------------------------- Total income 28,085 - ------------------------------------------------------------- Expenses Investment management 15,619 Shareholder servicing 6,878 Prospectus and shareholder reports 297 Registration 261 Custody and accounting 127 Directors 9 Legal and audit 7 Miscellaneous 27 - ------------------------------------------------------------- Total expenses 23,225 Expenses paid indirectly (24) - ------------------------------------------------------------- Net expenses 23,201 - ------------------------------------------------------------- Net investment income 4,884 Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities 75,037 Foreign currency transactions (6) - ------------------------------------------------------------- Net realized gain (loss) 75,031 Change in net unrealized gain or loss on securities 408,256 - ------------------------------------------------------------- Net realized and unrealized gain (loss) 483,287 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 488,171 The accompanying notes are an integral part of these financial statements. ================================================================================ T. Rowe Price Blue Chip Growth Fund Unaudited STATEMENT OF CHANGES IN NET ASSETS In thousands 6 Months Year Ended Ended 6/30/99 12/31/98 Increase=(Decrease)=in=Net=Assets Operations Net investment income $ 4,884 $ 13,909 Net realized gain (loss) 75,031 66,217 Change in net unrealized gain or loss 408,256 754,612 - ------------------------------------------------------------------------------- Increase (decrease) in net assets from operations 488,171 834,738 - ------------------------------------------------------------------------------- Distributions to shareholders Net investment income - (15,078) Net realized gain - (53,457) - ------------------------------------------------------------------------------- Decrease in net assets from distributions - (68,535) - ------------------------------------------------------------------------------- Capital share transactions* Shares sold 1,646,390 1,971,557 Distributions reinvested - 67,284 Shares redeemed (660,236) (819,465) - ------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 986,154 1,219,376 Net=Assets Increase (decrease) during period 1,474,325 1,985,579 Beginning of period 4,330,134 2,344,555 End of period $5,804,459 $ 4,330,134 *Share information Shares sold 52,034 72,851 Distributions reinvested - 2,377 Shares redeemed (20,838) (30,731) Increase (decrease) in shares outstanding 31,196 44,497 The accompanying notes are an integral part of these financial statements. ================================================================================ T. Rowe Price Blue Chip Growth Fund Unaudited June 30, 1999 NOTES TO FINANCIAL STATEMENTS - ----------------------------- NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES - ---------------------------------------- T. Rowe Price Blue Chip Growth Fund, Inc. (the fund) is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company and commenced operations on June 30, 1993. The accompanying financial statements are prepared in accordance with generally accepted accounting principles for the investment company industry; these principles may require the use of estimates by fund management. Valuation Equity securities listed or regularly traded on a securities exchange are valued at the last quoted sales price on the day the valuations are made. A security which is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Listed securities not traded on a particular day and securities regularly traded in the over-the-counter market are valued at the mean of the latest bid and asked prices. Other equity securities are valued at a price within the limits of the latest bid and asked prices deemed by the Board of Directors, or by persons delegated by the Board, best to reflect fair value. Investments in mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. For purposes of determining the fund's net asset value per share, the U.S. dollar value of all assets and liabilities initially expressed in foreign currencies is determined by using the mean of the bid and offer prices of such currencies against U.S. dollars quoted by a major bank. Assets and liabilities for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by or under the supervision of the officers of the fund, as authorized by the Board of Directors. Currency Translation Assets and liabilities are translated into U.S. dollars at the prevailing exchange rate at the end of the reporting period. Purchases and sales of securities and income and expenses are translated into U.S. dollars at the prevailing exchange rate on the dates of such transactions. The effect of changes in foreign exchange rates on realized and unrealized security gains and losses is reflected as a component of such gains and losses. Other Income and expenses are recorded on the accrual basis. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Dividend income and distributions to shareholders are recorded by the fund on the ex-dividend date. Income and capital gain distributions are determined in accordance with federal income tax regulations and may differ from those determined in accordance with generally accepted accounting principles. Expenses paid indirectly reflect credits earned on daily, uninvested cash balances at the custodian, used to reduce the fund's custody charges. NOTE 2 - INVESTMENT TRANSACTIONS - -------------------------------- Purchases and sales of portfolio securities, other than short-term securities, aggregated $1,993,070,000 and $983,389,000, respectively, for the six months ended June 30, 1999. NOTE 3 - FEDERAL INCOME TAXES - ----------------------------- No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income. At June 30, 1999, the cost of investments for federal income tax purposes was substantially the same as for financial reporting and totaled $4,284,520,000. Net unrealized gain aggregated $1,151,632,000 at period-end, of which $1,573,000,000 related to appreciated investments and $21,368,000 to depreciated investments. NOTE 4 - RELATED PARTY TRANSACTIONS - ----------------------------------- The investment management agreement between the fund and T. Rowe Price Associates, Inc. (the manager) provides for an annual investment management fee, of which $2,828,000 was payable at June 30, 1999. The fee is computed daily and paid monthly, and consists of an individual fund fee equal to 0.30% of average daily net assets and a group fee. The group fee is based on the combined assets of certain mutual funds sponsored by the manager or Rowe Price-Fleming International, Inc. (the group). The group fee rate ranges from 0.48% for the first $1 billion of assets to 0.30% for assets in excess of $80 billion. At June 30, 1999, and for the six months then ended, the effective annual group fee rate was 0.32%. The fund pays a pro-rata share of the group fee based on the ratio of its net assets to those of the group. In addition, the fund has entered into agreements with the manager and two wholly owned subsidiaries of the manager, pursuant to which the fund receives certain other services. The manager computes the daily share price and maintains the financial records of the fund. T. Rowe Price Services, Inc. is the fund's transfer and dividend disbursing agent and provides shareholder and administrative services to the fund. T. Rowe Price Retirement Plan Services, Inc. provides subaccounting and recordkeeping services for certain retirement accounts invested in the fund. The fund incurred expenses pursuant to these related party agreements totaling approximately $5,232,000 for the six months ended June 30, 1999, of which $977,000 was payable at period-end. Additionally, the fund is one of several T. Rowe Price-sponsored mutual funds (underlying funds) in which the T. Rowe Price Spectrum Funds (Spectrum) may invest. Spectrum does not invest in the underlying funds for the purpose of exercising management or control. Expenses associated with the operation of Spectrum are borne by each underlying fund to the extent of estimated savings to it and in proportion to the average daily value of its shares owned by Spectrum, pursuant to special servicing agreements between and among Spectrum, the underlying funds, T. Rowe Price, and, in the case of T. Rowe Price Spectrum International, Rowe Price-Fleming International. Spectrum Growth Fund held approximately 5.7% of the outstanding shares of the fund at June 30, 1999. For the six months then ended, the fund was allocated $407,000 of Spectrum expenses, $99,000 of which was payable at period-end. The fund may invest in the Reserve Investment Fund and Government Reserve Investment Fund (collectively, the Reserve Funds), open-end management investment companies managed by T. Rowe Price Associates, Inc. The Reserve Funds are offered as cash management options only to mutual funds and other accounts managed by T. Rowe Price and its affiliates and are not available to the public. The Reserve Funds pay no investment management fees. Distributions from the Reserve Funds to the fund for the six months ended June 30, 1999, totaled $6,912,000 and are reflected as interest income in the accompanying Statement of Operations. During the six months ended June 30, 1999, the fund, in the ordinary course of business, placed security purchase and sale orders aggregating $2,028,000 with certain affiliates of the manager and paid commissions of $1,000 related thereto. ================================================================================ T. Rowe Price Shareholder Services INVESTMENT SERVICES AND INFORMATION - ----------------------------------- KNOWLEDGEABLE SERVICE REPRESENTATIVES BY PHONE 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10 p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET. IN PERSON Available in T. Rowe Price Investor Centers. ACCOUNT SERVICES CHECKING Available on most fixed income funds ($500 minimum). AUTOMATIC INVESTING From your bank account or paycheck. AUTOMATIC WITHDRAWAL Scheduled, automatic redemptions. DISTRIBUTION OPTIONS Reinvest all, some, or none of your distributions. AUTOMATED 24-HOUR SERVICES Including Tele*Access (Registration Mark) and the T. Rowe Price Web site on the Internet. Address: www.troweprice.com BROKERAGE SERVICES* INDIVIDUAL INVESTMENTS Stocks, bonds, options, precious metals, and other securities at a savings over full-service commission rates.** INVESTMENT INFORMATION COMBINED STATEMENT Overview of all your accounts with T. Rowe Price. SHAREHOLDER REPORTS Fund managers' reviews of their strategies and results. T. ROWE PRICE Report Quarterly investment newsletter discussing markets and financial strategies. PERFORMANCE UPDATE Quarterly review of all T. Rowe Price fund results. INSIGHTS Educational reports on investment strategies and financial markets. INVESTMENT GUIDES Asset Mix Worksheet, College Planning Kit, Diversifying Overseas: A Guide to International Investing, Personal Strategy Planner, Retirees Financial Guide, and Retirement Planning Kit. * T. Rowe Price Brokerage is a division of T. Rowe Price Investment Services, Inc., Member NASD/SIPC. ** Based on a January 1999 survey for representative-assisted stock trades. Services vary by firm, and commissions may vary depending on size of order. ================================================================================ T. Rowe Price Mutual Funds - -------------------------- STOCK FUNDS - ---------------------------------------- Domestic Blue Chip Growth Capital Appreciation Capital Opportunity Diversified Small-Cap Growth Dividend Growth Equity Income Equity Index 500 Extended Equity Market Index Financial Services Growth & Income Growth Stock Health Sciences Media & Telecommunications Mid-Cap Growth Mid-Cap Value New America Growth New Era New Horizons* Real Estate Science & Technology Small-Cap Stock Small-Cap Value Spectrum Growth Total Equity Market Index Value International/Global Emerging Markets Stock European Stock Global Stock International Discovery International Growth & Income International Stock Japan Latin America New Asia Spectrum International BOND FUNDS - ---------------------------------------- Domestic Taxable Corporate Income GNMA High Yield New Income Short-Term Bond Short-Term U.S. Government Spectrum Income Summit GNMA Summit Limited-Term Bond U.S. Treasury Intermediate U.S. Treasury Long-Term Domestic Tax-Free California Tax-Free Bond Florida Intermediate Tax-Free** Georgia Tax-Free Bond Maryland Short-Term Tax-Free Bond Maryland Tax-Free Bond New Jersey Tax-Free Bond New York Tax-Free Bond Summit Municipal Income Summit Municipal Intermediate Tax-Free High Yield Tax-Free Income Tax-Free Intermediate Bond*** Tax-Free Short-Intermediate Virginia Short-Term Tax-Free Bond Virginia Tax-Free Bond - ---------------------------------------- International/Global Emerging Markets Bond Global Bond International Bond MONEY MARKET FUNDS + - ---------------------------------------- Taxable Prime Reserve Summit Cash Reserves U.S. Treasury Money Tax-Free California Tax-Free Money New York Tax-Free Money Summit Municipal Money Market Tax-Exempt Money BLENDED ASSET FUNDS - ---------------------------------------- Balanced Personal Strategy Balanced Personal Strategy Growth Personal Strategy Income Tax-Efficient Balanced T. ROWE PRICE NO-LOAD VARIABLE ANNUITY - ---------------------------------------- Equity Income Portfolio International Stock Portfolio Limited-Term Bond Portfolio Mid-Cap Growth Portfolio New America Growth Portfolio Personal Strategy Balanced Portfolio Prime Reserve Portfolio * Closed to new investors. ** Formerly named Florida Insured Intermediate Tax-Free. *** Formerly named Tax-Free Insured Intermediate Bond. + Investments in the funds are not insured or guaranteed by the FDIC or any other government agency. Although the funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the funds. Please call for a prospectus. Read it carefully before investing. The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by First Security Benefit Life Insurance Company of New York, White Plains, NY. T. Rowe Price refers to the underlying portfolios' investment managers and the distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security Benefit Group of Companies and the T. Rowe Price companies are not affiliated. The variable annuity may not be available in all states. The contract has limitations. Call a representative for costs and complete details of the coverage. =========================================================================== T. Rowe Price Retirement Plans and Resources RETIREMENT PLANS AND RESOURCES We recognize that saving for retirement is the number one investment goal for most Americans. We can help you meet your retirement needs, whether you are starting an IRA or designing a retirement program for your employees. T. Rowe Price offers an assortment of retirement plans for individuals, the self-employed, small businesses, corporations, and nonprofit organizations. We provide recordkeeping, communications, and investment management services, as well as a variety of educational materials, self-help planning guides, and software tools to help you choose and implement a retirement plan appropriate for you. For information or to request literature, call us at 1-800-638-5660. IRAs AND QUALIFIED PLANS ------------------------ Traditional IRA Roth IRA Rollover IRA SEP-IRA SIMPLE IRA Profit Sharing Money Purchase Pension "Paired" Plans (Money Purchase Pension and Profit Sharing Plans) 401(k) 403(b) 457 Deferred Compensation RETIREMENT RESOURCES AT T. ROWE PRICE ------------------------------------- PLANNING AND INFORMATIONAL GUIDES --------------------------------- Minimum Required Distributions Guide Retirement Planning Kit Retirees Financial Guide Tax Considerations for Investors INVESTMENT KITS --------------- The IRA Investing Kit Roth IRA Conversion Kit Rollover IRA Kit The T. Rowe Price SIMPLE IRA Plan Kit The T. Rowe Price SEP-IRA Plan The Simplified Keogh Plan [Registration Mark] From T. Rowe Price The T. Rowe Price 401(k) Century Plan [Registration Mark] (for small businesses) Money Purchase Pension/Profit Sharing Plan Kit Investing for Retirement in Your 403(b) Account The T. Rowe Price No-Load Variable Annuity Information Kit INSIGHTS REPORTS ---------------- The Challenge of Preparing for Retirement Financial Planning After Retirement The Roth IRA: A Review SOFTWARE PACKAGES ----------------- T. ROWE PRICE RETIREMENT PLANNING ANALYZER [TM] CD-ROM or diskette $19.95. To order, please call 1-800-541-5760. Also available on the Internet for $9.95. T. ROWE PRICE VARIABLE ANNUITY ANALYZER [TM] CD-ROM or diskette, free. To order, please call 1-800-469-5304. Many of these resources are also available for viewing or ordering on the Internet at www.troweprice.com. =========================================================================== T. Rowe Price Insights Reports - ------------------------------ THE FUNDAMENTALS OF INVESTING Whether you are unsure how to get started or are saving for a specific goal, such as retirement or college, the T. Rowe Price Insights series can help you make informed investment decisions. These reports, written in plain English about fundamental investment topics, can be useful at every stage of your investment journey. They cover a range of topics, from the basic, such as getting started with mutual funds, to the more advanced, such as managing risk through diversification or buying individual securities through a broker. To request one or more Insights, call us at 1-800-638-5660. INSIGHTS REPORTS ---------------- GENERAL INFORMATION The ABCs of Y2K The ABCs of Giving Back to Basics: The ABCs of Investing The Challenge of Preparing for Retirement Financial Planning After Retirement Getting Started: Investing With Mutual Funds The Roth IRA: A Review Tax Information for Mutual Fund Investors INVESTMENT STRATEGIES --------------------- Conservative Stock Investing Dollar Cost Averaging Equity Index Investing Growth Stock Investing Investing for Higher Yield Managing Risk Through Diversification The Power of Compounding Value Investing TYPES OF SECURITIES ------------------- The Basics of International Stock Investing The Basics of Tax-Free Investing The Fundamentals of Fixed Income Investing Global Bond Investing Investing in Common Stocks Investing in Emerging Growth Stocks Investing in Financial Services Stocks Investing in Health Care Stocks Investing in High-Yield Municipal Bonds Investing in Money Market Securities Investing in Mortgage-Backed Securities Investing in Natural Resource Stocks Investing in Science and Technology Stocks Investing in Small-Company Stocks Understanding Derivatives Understanding High-Yield "Junk" Bonds BROKERAGE INSIGHTS ------------------ Combining Individual Securities With Mutual Funds Getting Started: An Introduction to Individual Securities What You Should Know About Bonds What You Should Know About Margin and Short-Selling What You Should Know About Options What You Should Know About Stocks T. Rowe Price Insights are also available for reading or downloading on the Internet at WWW.TROWEPRICE.COM. ================================================================================ FOR YIELD, PRICE, LAST TRANSACTION, CURRENT BALANCE, OR TO CONDUCT TRANSACTIONS, 24 HOURS, 7 DAYS A WEEK, CALL TELE*ACCESS [REGISTRATION MARK:] 1-800-638-2587 toll free FOR ASSISTANCE WITH YOUR EXISTING FUND ACCOUNT, CALL: Shareholder Service Center 1-800-225-5132 toll free 410-625-6500 Baltimore area TO OPEN A BROKERAGE ACCOUNT OR OBTAIN INFORMATION, CALL: 1-800-638-5660 toll free INTERNET ADDRESS: www.troweprice.com T. Rowe Price Associates 100 East Pratt Street Baltimore, Maryland 21202 This report is authorized for distribution only to shareholders and to others who have received a copy of the prospectus appropriate to the fund or funds covered in this report. INVESTOR CENTERS: 101 East Lombard St. Baltimore, MD 21202 T. Rowe Price Financial Center 10090 Red Run Blvd. Owings Mills, MD 21117 Farragut Square 900 17th Street, N.W. Washington, D.C. 20006 4200 West Cypress St. 10th Floor Tampa, FL 33607 4410 ArrowsWest Drive Colorado Springs, CO 80907 Warner Center 21800 Oxnard Street, Suite 270 Woodland Hills, CA 91367 T. Rowe Price Investment Services, Inc., Distributor. F93-051 6/30/99 -----END PRIVACY-ENHANCED MESSAGE-----