Fellow Shareholders
Your Fund's return of 6.2% in the fourth quarter capped an excellent year,
both in absolute terms and compared with the various unmanaged indices shown
below. Stocks of small and mid-sized companies continued to outpace their
larger-cap counterparts in 1993. Since its inception on June 30, 1992, the
Fund has gained 57.2%.
Performance Comparison
Periods Ended 12/31/93
3 Months 12 Months
____________________
Mid-Cap Growth Fund 6.2% 26.2%
S&P MidCap Index 2.7 14.0
S&P 500 Index 2.3 10.1
Nasdaq Composite* 1.8 14.7
*Principal only
Capital Gain Distribution
On December 21, the Fund's Board of Directors declared a short-term capital
gain distribution of $0.30 per share payable to shareholders of record on that
date. This distribution was reflected on the statement or check mailed to you
in early January and on Form 1099-DIV mailed later in the month.
Market Environment
Stocks rose for the third consecutive year in spite of widespread concern
about a slow economic recovery in the United States, generally depressed
economic conditions in Europe and Japan, the budget deficit, and retroactive
individual and corporate tax hikes. However, these apparent obstacles were
overwhelmed by the lowest interest rates in a generation, which unleashed
powerful forces within the economy: corporations refinanced their debt at
lower rates and strengthened their balance sheets by selling equity to
receptive buyers; homeowners refinanced their mortgages, generating
incremental spending in the consumer sector; the housing and auto sectors
experienced surging demand prompted by lower financing costs; and investors
sought more rewarding but riskier investments, especially common stocks, to
replace maturing certificates of deposit and low-yielding money market funds.
Although interest rates have risen modestly from their lows, the economy is
entering 1994 with considerable momentum.
Investors rotated from sector to sector throughout the year with
dizzying speed. Financial stocks were favored early in the year, but lagged
when it appeared that interest rates had bottomed; health care stocks were
savaged as the Clinton health plan was revealed in the spring, but many have
since recovered much lost ground; and resource-based groups such as energy and
gold gyrated with the prices of the underlying commodities. Cyclicals,
including technology and basic industrial companies, fared reasonably well
throughout the year and performed very well in the final quarter.
In general, this economic recovery is being led by small and mid-sized
companies. While many large, established companies continue to shed
divisions, lay off employees, and take the now ubiquitous one-time charge to
earnings, many smaller, less prominent companies are growing quickly. A
number of the mid-sized companies in your Fund are using advanced technologies
and new management methods to render previous ways of doing business obsolete.
In many industries, operating on a large scale impedes their ability to adapt
to new technologies and market changes.
Portfolio Review
The market rewarded companies that were able to increase their earnings
rapidly in 1993's slowly growing economy, regardless of industry sector. The
top contributor to the Fund for the year was CUC International, a dominant
direct marketer of value-oriented consumer shopping services. The stock's
rise reflected its consistent earnings growth and excellent prospects in the
emerging business of interactive home shopping. Other top contributors
included TriMas, a manufacturer of industrial products with dominant shares in
several specialized markets; and Charles Schwab, the discount brokerage firm
which capitalized on strong trading volume and innovative products to increase
market share and post strong earnings advances. In the fourth quarter, our
three gold holdings also scored impressive gains as gold prices rose.
Several of the Fund's worst performing stocks in 1993 were companies
that did not meet earnings expectations. ShowBiz Pizza Time, a restaurant
chain oriented toward children, experienced weak sales and disappointing
earnings. Merry-Go-Round Enterprises, an apparel retailer, made a disastrous
acquisition and simultaneously misjudged fashion trends. We eliminated both
positions between late summer and early fall. In the fourth quarter, three of
the bottom 10 contributors were energy service companies whose stocks reacted
to falling oil prices.
Portfolio Strategy
During 1993, we reduced our exposure to the consumer and health care sectors
and added to positions in business service and industrial companies, as shown
below:
Returns by Market Sector
12/31/92 12/31/93
_______ _______
Financial 15% 15%
Health Care 7 4
Consumer 24 17
Technology 7 8
Business Services 17 21
Energy 6 6
Basic Industrial 12 15
Basic Materials 3 6
Reserves 9 8
We continue to emphasize several areas. The Fund owns a number of
expanding financial companies, many of which are currently being accorded
relatively modest valuations. Because of our belief that consumers are now
intensely interested in value and generally prefer things that can be
experienced over those meant to be acquired, our consumer holdings concentrate
on value-oriented retailers as well as entertainment companies. A significant
portion of our business services weighting consists of companies that provide
outsourced computer services. We are also increasing our exposure to the
waste disposal industry which we believe is in the early stages of a cyclical
recovery.
We continue to overweight the industrial sector because American
manufacturers, pressured by a strong U.S. dollar in the mid-1980s, were among
the first in the industrialized world to begin restructuring. Having applied
advanced technologies and improved processes, many of these companies now rank
among the world's highest-quality, lowest-cost manufacturers. Finally, with
regard to your Fund's gold stocks holdings, we expect that the rapid
development taking place in many emerging economies that lack stable
currencies will strengthen the demand for gold, creating an upward bias for
gold prices over the next several years.
Outlook
The U.S. economy appears to be recovering steadily, without undue upward
pressures on inflation and interest rates. As we see it, the prospects for
mid-sized growth companies remain favorable. Your Fund emphasizes companies
whose sales and earnings should rise significantly faster than the market, but
whose stock valuations (e.g., P/E ratios) remain at modest premiums.
While our outlook for the Fund remains optimistic, we must again inject
the caveat that stock valuations are historically high - not specifically in
the mid-cap sector, but for the market as a whole. Signs of rampant
speculation have appeared in the volume and quality of initial public
offerings as well as in the stampede of U.S. investors into foreign equity
funds specializing in emerging markets.
The Fund's performance in the six quarters since inception has been
gratifying, but shareholders should not expect this pace to be sustained. Over
the next several years, however, your Fund should be well-positioned to
achieve attractive returns.
Thank you for your continued confidence and support.
Respectfully submitted,
Brian W. H. Berghuis
President and Chairman of the
Investment Advisory Committee
January 24, 1994
Chart 1 - Performance Comparison
Total Return Performance
Periods ended December 31, 1993
Since Inception
1 Year On 6/30/92*
________ ____________
26.24% 35.06%
*Average annual compound total return
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
Twenty-Five Largest Holdings
December 31, 1993
Percent of
Company Net Assets
________________________________ __________
TriMas 2.6%
SEI 2.4
Danaher 2.3
Teleflex 2.3
Pittston Services Group 2.2
CUC International 2.1
Alco Standard 2.1
Albany International 2.0
Sbarro 2.0
Smith International 2.0
Fred Meyer 1.9
Freeport-McMoRan Copper & Gold 1.9
First Financial Management 1.9
Placer Dome 1.9
SunGard Data Systems 1.9
Charles Schwab 1.9
Reliance Electric 1.8
TVX Gold 1.8
Addington Resources 1.7
American Re 1.7
Mercantile Bancorporation 1.7
Phillips-Van Heusen 1.7
Duff & Phelps 1.7
Minerals Technologies 1.6
Consolidated Stores 1.5
_____________________________________________________________________________
Total 48.6%
Contributions to the Net Asset Value Per Share
T. Rowe Price Mid-Cap Growth Fund
Three Months Ended December 31, 1993
TEN BEST CONTRIBUTORS
TriMas 11(cent)
SEI 10
Pittston Services Group 9
Freeport-McMoRan Copper & Gold 9
Placer Dome 8
TVX Gold 6
Boston Scientific* 5
Teleflex 5
Hospitality Franchise* 4
Alco Standard* 4
_____________________________________________________________________________
Total 71(cent)
TEN WORST CONTRIBUTORS
President Riverboat Casinos* - 4(cent)
Halliburton 4
American Re 4
Enterra 3
Reliance Electric 3
Oceaneering International 2
Integra Financial 2
Cott** 2
Charles Schwab 2
AMBAC 2
_____________________________________________________________________________
Total -28(cent)
* Position added
** Position eliminated
Twelve Months Ended December 31, 1993
TEN BEST CONTRIBUTORS
CUC International 23(cent)
TriMas 22
Charles Schwab 16
Placer Dome* 13
Marvel Entertainment 13
SEI 12
Danaher 11
Autotote* 11
BLOCKBUSTER Entertainment* 11
Hollywood Park* 11
_____________________________________________________________________________
Total 143(cent)
TEN WORST CONTRIBUTORS
ShowBiz Pizza Time** -15(cent)
Merry-Go-Round Enterprises** 14
Stryker** 10
Policy Management Systems** 8
Topps** 7
Reliance Electric* 6
NovaCare** 5
Kaydon** 5
ADVO 5
Jenny Craig** 4
_____________________________________________________________________________
Total -79(cent)
Statement of Net Assets (Value in thousands)
T. Rowe Price Mid-Cap Growth Fund / December 31, 1993
Common Stocks - 91.5%
FINANCIAL - 15.2%
Value
______
BANK & TRUST - 4.4%
20,000 shs. Integra Financial. . . . . . . . . . . . . $ 860
25,000 Mercantile Bancorporation. . . . . . . . . 1,128
30,000 Society Corp.. . . . . . . . . . . . . . . 893
2,881
INSURANCE - 5.0%
25,000 20th Century Industries. . . . . . . . . . 684
40,000 * American Re. . . . . . . . . . . . . . . . 1,135
9,600 Citizens Corp. . . . . . . . . . . . . . . 188
30,000 * PartnerRe Holdings . . . . . . . . . . . . 653
20,000 Selective Insurance. . . . . . . . . . . . 610
13,270
FINANCIAL SERVICES - 5.8%
20,000 AMBAC. . . . . . . . . . . . . . . . . . . 840
37,500 Charles Schwab . . . . . . . . . . . . . . 1,214
15,000 Dreyfus. . . . . . . . . . . . . . . . . . 675
50,000 Duff & Phelps. . . . . . . . . . . . . . . 1,100
3,829
Total Financial 9,980
HEALTH CARE - 4.4%
PHARMACEUTICALS - 0.9%
15,000 * Roberts Pharmaceutical . . . . . . . . . . 596
BIOTECHNOLOGY - 1.4%
16,000 * Biogen . . . . . . . . . . . . . . . . . . 638
3,000 * Chiron . . . . . . . . . . . . . . . . . . 252
890
MEDICAL INSTRUMENTS & DEVICES - 2.1%
20,000 Arrow International. . . . . . . . . . . . 475
75,000 * Boston Scientific. . . . . . . . . . . . . 938
1,413
Total Health Care 2,899
CONSUMER - 16.6%
SOFT GOOD RETAILERS - 3.0%
17,000 * Kohl's . . . . . . . . . . . . . . . . . . 854
30,000 Phillips-Van Heusen. . . . . . . . . . . . 1,125
1,979
HARD GOOD RETAILERS - 3.4%
50,000 * Consolidated Stores. . . . . . . . . . . . 994
35,000 * Fred Meyer . . . . . . . . . . . . . . . . 1,260
2,254
RESTAURANTS - 2.9%
30,000 shs. Sbarro . . . . . . . . . . . . . . . . . . $ 1,324
25,000 * Shoney's . . . . . . . . . . . . . . . . . 578
1,902
ENTERTAINMENT - 5.1%
25,000 BLOCKBUSTER Entertainment. . . . . . . . . 766
20,000 * Hollywood Park . . . . . . . . . . . . . . 600
25,000 * International Family Entertainment
(Class B). . . . . . . . . . . . . . . 509
30,000 * President Riverboat Casinos. . . . . . . . 660
5,000 Turner Broadcasting Systems
(Class A). . . . . . . . . . . . . . . 136
25,000 Turner Broadcasting Systems
(Class B). . . . . . . . . . . . . . . 675
3,346
CONSUMER SERVICES - 2.2%
39,000 * CUC International. . . . . . . . . . . . . 1,404
Total Consumer 10,885
TECHNOLOGY - 7.8%
COMPUTER HARDWARE - 0.6%
15,000 * Silicon Graphics . . . . . . . . . . . . . 371
COMPUTER SOFTWARE - 3.5%
10,000 Autodesk . . . . . . . . . . . . . . . . . 450
10,000 * Intuit . . . . . . . . . . . . . . . . . . 426
10,000 * Oracle Systems . . . . . . . . . . . . . . 287
6,000 * Parametric Technology. . . . . . . . . . . 232
10,000 * PeopleSoft . . . . . . . . . . . . . . . . 313
7,000 * Sybase . . . . . . . . . . . . . . . . . . 294
5,000 * Synopsys . . . . . . . . . . . . . . . . . 226
2,228
PERIPHERALS - 1.0%
30,000 * Autotote (Class A) . . . . . . . . . . . . 660
NETWORKING & TELECOM
EQUIPMENT - 0.5%
3,000 * 3Com . . . . . . . . . . . . . . . . . . . 141
3,000 * DSC Communications . . . . . . . . . . . . 185
326
SEMICONDUCTORS - 2.2%
14,000 Linear Technology. . . . . . . . . . . . . 543
10,000 * Maxim Integrated Products. . . . . . . . . 479
10,000 * Xilinx . . . . . . . . . . . . . . . . . . 478
1,500
Total Technology 5,085
T. Rowe Price Mid-Cap Growth Fund / Statement of Net Assets
BUSINESS SERVICES - 20.8%
TELECOM SERVICES - 0.9%
20,000 shs. * ALC Communications . . . . . . . . . . . . $ 575
COMPUTER SERVICES - 7.4%
22,000 First Financial Management . . . . . . . . 1,248
20,000 * Information Resources. . . . . . . . . . . 770
60,000 SEI. . . . . . . . . . . . . . . . . . . . 1,575
30,000 * SunGard Data Systems . . . . . . . . . . . 1,237
4,830
DISTRIBUTION - 2.1%
25,000 Alco Standard. . . . . . . . . . . . . . . 1,369
MEDIA & ADVERTISING - 2.6%
50,000 ADVO . . . . . . . . . . . . . . . . . . . 900
16,000 * Catalina Marketing . . . . . . . . . . . . 800
1,700
ENVIRONMENTAL - 2.8%
60,000 * Addington Resources. . . . . . . . . . . . 1,140
30,000 * Sanifill . . . . . . . . . . . . . . . . . 653
1,793
MISCELLANEOUS BUSINESS SERVICES - 5.0%
17,500 * Hospitality Franchise. . . . . . . . . . . 930
15,000 * Manpower . . . . . . . . . . . . . . . . . 264
45,000 Pittston Services. . . . . . . . . . . . . 1,299
25,000 * Sealed Air . . . . . . . . . . . . . . . . 791
3,284
Total Business Services 13,551
ENERGY - 5.7%
ENERGY SERVICES - 5.7%
46,500 * Enterra. . . . . . . . . . . . . . . . . . 953
25,000 Halliburton. . . . . . . . . . . . . . . . 797
50,000 * Oceaneering International. . . . . . . . . 681
150,000 * Smith International. . . . . . . . . . . . 1,313
Total Energy 3,744
INDUSTRIAL - 14.7%
PAPER & FOREST PRODUCTS - 2.1%
70,000 Albany International (Class A) . . . . . . 1,339
SPECIALTY CHEMICALS - 3.6%
20,000 A. Schulman. . . . . . . . . . . . . . . . 675
30,000 Crompton & Knowles . . . . . . . . . . . . 660
35,000 Minerals Technologies. . . . . . . . . . . 1,015
2,350
MACHINERY - 9.0%
40,000 shs. Danaher. . . . . . . . . . . . . . . . . . $ 1,525
70,000 * Reliance Electric (Class A). . . . . . . . 1,181
40,000 Teleflex . . . . . . . . . . . . . . . . . 1,480
70,000 TriMas . . . . . . . . . . . . . . . . . . 1,706
5,892
Total Industrial 9,581
BASIC MATERIALS - 6.3%
METALS & MINING - 0.5%
6,000 Nucor. . . . . . . . . . . . . . . . . . . 318
MINING - 5.8%
50,000 Freeport-McMoRan Copper &
Gold (Class A) . . . . . . . . . . . . 1,250
6,660 Pittston Minerals. . . . . . . . . . . . . 159
50,000 Placer Dome. . . . . . . . . . . . . . . . 1,244
175,000 * TVX Gold . . . . . . . . . . . . . . . . . 1,159
3,812
Total Basic Materials 4,130
Total Common Stocks (Cost - $49,203) 59,855
SHORT-TERM INVESTMENTS - 12.2%
CERTIFICATES OF DEPOSIT - 1.5%
$1,000,000 Commerzbank, AG, 3.33%,
5/2/94 . . . . . . . . . . . . . . . . 999
COMMERCIAL PAPER - 10.4%
1,000,000 Corporate Asset Funding,
3.20%, 3/7/94. . . . . . . . . . . . . 985
873,000 Harvard University, 3.20%,
1/3/94 . . . . . . . . . . . . . . . . 873
1,000,000 Morgan Stanley Group, VRMTN,
3.475%, 3/15/95. . . . . . . . . . . . 1,000
1,000,000 Nestle Capital, 3.45%, 1/12/94 . . . . . . . 999
2,000,000 PPG Holdings B.V., 3.25 - 3.35%,
2/2/94 . . . . . . . . . . . . . . . . 1,989
1,000,000 South Australian Government
Finance Auth., 4(2), 3.35%,
1/4/94 . . . . . . . . . . . . . . . . 986
6,832
U.S. GOVERNMENT OBLIGATION - 0.3%
200,000 United States Treasury Bills,
3.11%, 1/13/94 . . . . . . . . . . . . 197
Total Short-Term Investments (Cost - $8,028) 8,028
Total Investments in Securities -
103.7% (Cost $57,231) $67,883
Other Assets Less Liabilities - (3.7)% . . . . (2,457)
Net Assets Consisting of:
Accumulated realized gains/losses -
net of distributions . . . . . . . . . . . . $ 812
Unrealized appreciation of
investments. . . . . . . . . . . . . . . . . 10,652
Paid-in-capital applicable to
4,308,797 shares of $0.01 par value
capital stock outstanding;
1,000,000,000 shares authorized. . . . . . . 53,962
_______
Net Assets - 100.0% $65,426
_______
_______
Net Asset Value Per Share $15.18
______
______
* Non-income producing
VRMTN Variable Rate Medium Term Note
Statement of Operations
T. Rowe Price Mid-Cap Growth Fund / Year Ended December 31, 1993
Amounts in Thousands
____________________
INVESTMENT INCOME
Income
Dividends . . . . . . . . . . . . . . . . . . . . $ 300
Interest. . . . . . . . . . . . . . . . . . . . . 166
______
Total income. . . . . . . . . . . . . . . . . . . $ 466
Expenses
Investment management fees. . . . . . . . . . . . 153
Shareholder servicing fees & expenses . . . . . . 153
Custodian and accounting fees & expenses. . . . . 96
Registration fees & expenses. . . . . . . . . . . 35
Legal & auditing fees . . . . . . . . . . . . . . 28
Prospectus & shareholder reports. . . . . . . . . 20
Directors' fees & expenses. . . . . . . . . . . . 9
Miscellaneous . . . . . . . . . . . . . . . . . . 24
______
Total expenses. . . . . . . . . . . . . . . . . . 518
_______
Net investment income. . . . . . . . . . . . . . . . (52)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain. . . . . . . . . . . . . . . . . . 2,072
Change in unrealized appreciation or depreciation . 8,335
______
Net gain on investments. . . . . . . . . . . . . . . 10,407
_______
INCREASE IN NET ASSETS FROM OPERATIONS . . . . . . . $10,355
_______
_______
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Mid-Cap Growth Fund
From
June 30, 1992
(Commencement of
Year Ended Operations) to
December 31, 1993 December 31, 1992
_________________ ________________
Amounts in Thousands
________________________________
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income. . . . . . . . . . . . $ (52) $ 10
Net realized gain on investments . . . . . . 2,072 369
Change in unrealized appreciation or
depreciation of investments . . . . . . . 8,335 2,317
________ ________
Increase in net assets from operations . . . 10,355 2,696
________ ________
Distributions to shareholders
Net realized gain on investments . . . . . . (1,224) (379)
________ ________
Capital share transactions
Sold 3,262 and 2,527 shares. . . . . . . . . 44,666 28,396
Distributions reinvested of 80 and 30
shares. . . . . . . . . . . . . . . . . . 1,178 363
Redeemed 1,284 and 316 shares. . . . . . . . (17,159) (3,574)
________ ________
Increase in net assets from capital share
transactions. . . . . . . . . . . . . . . 28,685 25,185
. . . . . . . . . . . . . . . . . . . . . ________ ________
Net equalization . . . . . . . . . . . . . . . 4 4
________ ________
Total increase . . . . . . . . . . . . . . . . 37,820 27,506
NET ASSETS
Beginning of period. . . . . . . . . . . . . 27,606 100
________ ________
End of period. . . . . . . . . . . . . . . . $ 65,426 $ 27,606
________ ________
________ ________
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
Note 1 - Significant Accounting Policies
T. Rowe Price Mid-Cap Growth Fund (the Fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company.
A) Valuation - Equity securities listed or regularly traded on a securities
exchange (including NASDAQ) 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. Other equity securities and those
listed securities that are not traded on a particular day 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. Short-term debt securities are valued at their cost which, when
combined with accrued interest, approximates fair value.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by, or under the supervision of, the officers of
the Fund, as authorized by the Board of Directors.
B) 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 an 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 which may differ from generally accepted accounting
principles.
The Fund follows the practice of equalization under which undistributed
net investment income per share is unaffected by Fund shares sold or redeemed.
C) Accounting Change - Effective as of the beginning of the year, the Fund
adopted a recently issued accounting standard related to shareholder
distributions. This change resulted in a reclassification to paid-in-capital
of permanent differences between tax and financial reporting of net investment
income and net realized gains/losses. The cumulative effect of this change as
of December 31, 1992 decreased Accumulated net investment income - net of
distributions by $8,000, increased Accumulated realized gains/losses - net of
distributions by $9,000, and decreased Paid-in-capital by $1,000. The results
of operations and net assets were not affected by this change.
Note 2 - Portfolio Transactions
Purchases and sales of portfolio securities, other than short-term and U.S.
Government securities, aggregated $49,295,000 and $24,010,000, respectively,
for the year ended December 31, 1993.
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 December 31, 1993, the aggregate cost of investments for federal
income tax and financial reporting purposes was $57,231,000 and net unrealized
appreciation aggregated $10,652,000, of which $11,376,000 related to
appreciated investments and $724,000 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, computed daily and paid monthly, consisting of an Individual Fund Fee
equal to 0.35% 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 0.31% for assets in
excess of $34 billion. The effective annual Group Fee rate at December 31,
1993 and for the year then ended was 0.35%. The Fund pays a pro rata portion
of the Group Fee based on the ratio of the Fund's net assets to those of the
Group.
Under the terms of the investment management agreement, the Manager is
required 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%. Thereafter,
the Fund is required to reimburse the Manager for these expenses, provided
average net assets have grown or expenses have declined sufficiently so as not
to cause the Fund's ratio of expenses to average net assets to exceed 1.25% in
any month, and that no such reimbursement shall be made to the Manager after
December 31, 1995. Pursuant to this agreement, $136,000 of management fees
were not accrued by the Fund for the year ended December 31, 1993.
Additionally, $92,000 of unaccrued fees and expenses from 1992 are subject to
future reimbursement.
T. Rowe Price Services, Inc. (TRPS) and Retirement Plan Services, Inc.
(RPS) are wholly
Notes to Financial Statements
owned subsidiaries of the Manager. TRPS provides transfer and dividend
disbursing agent functions and shareholder services for all accounts. RPS
provides subaccounting and recordkeeping services for certain retirement
accounts invested in the Fund. The Manager, under a separate agreement,
calculates the daily share price and maintains the financial records of the
Fund. For the year ended December 31, 1993, the Fund incurred fees totalling
approximately $182,000 for these services provided by related parties. At
December 31, 1993, these investment mangement and service fees payable were
$38,000.
Financial Highlights
T. Rowe Price Mid-Cap Growth Fund
For a share outstanding throughout each period
____________________________________________
June 30, 1992
(Commencement
Year Ended of Operations) to
December 31, 1993 December 31, 1992
____________________________________________
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . $12.27 $10.00
_______ _______
Investment Activities
Net investment income . . . . . - 0.01*
Net realized and unrealized
gain. . . . . . . . . . . . 3.21 2.44
_______ _______
Total from Investment
Activities. . . . . . . . . . . 3.21 2.45
Distributions
Net realized gain . . . . . . . (0.30) (0.18)
_______ _______
NET ASSET VALUE,
END OF PERIOD . . . . . . . . . $15.18 $12.27
_______ _______
_______ _______
RATIOS/SUPPLEMENTAL DATA
Total Return . . . . . . . . . . . 26.2% 24.5%
Ratio of Expenses to Average
Net Assets. . . . . . . . . . . 1.25%* 1.25%!*
Ratio of Net Investment Income
to Average Net Assets . . . . . (0.12)% 0.16%!
Portfolio Turnover Rate. . . . . . 62.4% 51.9%!
Net Assets, End of Period
(in thousands). . . . . . . . . $65,426 $27,606
Number of Shareholder Accounts,
End of Period . . . . . . . . . 6,000 3,000
! Annualized.
* Excludes expenses in excess of a 1.25% voluntary expense limitation in
effect through December 31, 1993.
Report of Independent Accountants
To the Shareholders and Board of Directors of
T. Rowe Price Mid-Cap Growth Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the selected per
share data and information (which appears under the heading "Financial
Highlights") present fairly, in all material respects, the financial position
of T. Rowe Price Mid-Cap Growth Fund, Inc. at December 31, 1993, the results
of its operations for the year then ended, the changes in its net assets and
the selected per share data and information for the year then ended and for
the period June 30, 1992 (commencement of operations) to December 31, 1992, in
conformity with generally accepted accounting principles. These financial
statements and selected per share data and information (hereafter referred to
as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements 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 audits, which included
confirmation of securities at December 31, 1993 by correspondence with
custodians and brokers and, where appropriate, the application of alternative
auditing procedures for unsettled security transactions, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE
Baltimore, Maryland
January 19, 1994
Officers and Directors
James S. Riepe, Chairman
Brian W. H. Berghuis, President
Leo C. Bailey, Director
Donald W. Dick, Jr., Director
David K. Fagin, Director
James A. C. Kennedy, Director
Addison Lanier, Director
John K. Major, Director
Hubert D. Vos, Director
Paul M. Wythes, Director
Marcy L. Fisher, Vice President
Henry H. Hopkins, Vice President
John F. Wakeman, Vice President
Richard T. Whitney, Vice President
Lenora V. Hornung, Secretary
Carmen F. Deyesu, Treasurer
David S. Middleton, Controller
Chart 1 - Mid-Cap Growth Fund Performance Comparison
A line graph compares the 12/31/93 value of a hypothetical $10,000 investment
made in the Mid-Cap Growth Fund at inception (6/30/92) and a similar
investment made in the S&P Mid-Cap Index. At 12/31/93, the Fund investment
would have been worth $15,721 and the S&P Index investment would have been
worth $13,229.