<PAGE>
Semiannual Report
Mid-Cap
Growth
Fund
June 30, 1996
[LOGO OF T. ROWE PRICE APPEARS HERE]
<PAGE>
Report Highlights
-----------------
. Despite rising interest rates, the stock market extended its long rally
through the first half of 1996.
. Retail and energy service stocks performed particularly well, reflecting
accelerating economic growth and higher oil and natural gas prices.
. Your fund provided a strong 13.11% return for the first six months, exceeding
the S&P 500 and S&P MidCap Indexes as well as its Lipper peer group average.
. We trimmed our retail holdings as their prices surged, increased exposure to
rural cellular communications companies, and cautiously added to our
technology position on weakness in that sector.
. After 18 months of almost ideal equity market conditions, we see numerous
warning flags. While the near-term outlook is uncertain, we believe investors
will increasingly look to growth stocks as the long economic expansion ages.
<PAGE>
Fellow Shareholders
In spite of rising interest rates, the stock market turned in a strong
performance in the first half of 1996, continuing a powerful surge that began in
December 1994. While the medium-sized companies represented by the unmanaged
Standard & Poor's MidCap Index lagged the large-company S&P 500 in both the
first half of 1996 and the last 12 months, the Mid-Cap Growth Fund outperformed
both benchmarks as well as an average of other mid-cap funds during these
periods.
<TABLE>
<CAPTION>
Performance Comparison
----------------------------------------------------
Periods Ended 6/30/96 6 Months 12 Months
----------------------------------------------------
<S> <C> <C>
Mid-Cap Growth Fund 13.11% 34.45%
....................................................
S&P MidCap Index 9.22 21.59
....................................................
S&P 500 Index 10.10 26.00
....................................................
Lipper Mid Cap Funds Average 11.35 25.33
....................................................
</TABLE>
Since its inception on June 30, 1992, your fund has gained 151.39%.
MARKET
ENVIRONMENT
Many observers, ourselves included, thought the S&P 500's 37.6% gain in 1995,
its best performance since 1958, would be a difficult act to follow.
Nevertheless, the stock market showed surprising resiliency in the face of
rising long-term interest rates, which have climbed more than one percentage
point from their lows.
With little but election-year bickering emanating from Washington, investors
shifted their attention to the economy. While business activity began 1996 in a
slow-growth mode, signs of an acceleration started to appear late in the first
quarter, fanning fears of inflation and driving up interest rates. Propelled by
huge cash inflows into equity mutual funds, however, the stock market continued
its ascent. A rising dollar also made U.S. investments more attractive to
foreigners for the first time in several years.
PORTFOLIO REVIEW
Driven by better sales results in March, April, and May, retail stocks scored
big gains in the first half. Energy service stocks were also
1
<PAGE>
ONCE AGAIN, THE TOP CONTRIBUTORS ... CAME FROM A CROSS-SECTION OF INDUSTRIES.
strong performers, benefiting from higher natural gas prices and rising demand.
Technology stocks, which led the market in 1995, were mixed: while
communications issues surged, many other groups, such as semiconductors and
consumer software, faltered badly.
Once again, the top contributors to your fund's performance came from a cross-
section of industries. The first half's top contributors were Republic
Industries, a fast-growing company involved in electronic security systems, used
car retailing, and waste disposal, which announced several major acquisitions
during the period; National Data, a processor of credit card and health care
information, which announced a joint venture with MasterCard; and HFS, a hotel
and real estate agency franchiser, which recently announced its entry into the
rental car business and continued to exceed investors' earnings estimates by a
significant margin.
The worst detractors to performance in the first half were St. Jude Medical, a
manufacturer of pacemakers and heart valves whose earnings gains slowed; and
Mobile Telecommunication Technologies, a nationwide paging company which fumbled
a new product introduction.
INVESTMENT STRATEGY
The fund performed well in the first half even though the stock market was not
particularly well suited to our investment style. The ebullient market
environment has led to abundant speculation, particularly in areas emphasizing
conceptual themes, such as the Internet, where substantial sales and earnings
are years away, at best. Most of our holdings are companies with proven business
concepts and the ability to grow sales and earnings at reasonable rates. Many
of these compete in mundane industries such as industrial gas distribution,
electronic security systems, and payroll processing, but we believe their
businesses will thrive long after Wall Street's infatuation with the Internet
has faded.
There were only modest changes in the industry weightings of the fund in the
last six months, and we remain well diversified across a range of sectors, as
shown on the next page.
We trimmed some of our retail holdings in late spring as the stocks reacted
euphorically to a consumer rebound. We see less long-term
2
<PAGE>
opportunity in the sector than 5 and 10 years ago. The megatrend in retailing,
upon which many fortunes were made in the 1980s and early 1990s, was the
development of discount superstore chains in many different categories. There
are few niches left to exploit. However, we will continue to own companies that
we feel have good long-term growth prospects.
<TABLE>
<CAPTION>
Industry Diversification
- --------------------------------------------------
Percent of Percent of
Net Assets Net Assets
12/31/95 6/30/96
- --------------------------------------------------
<S> <C> <C>
Financial 9% 10%
..................................................
Health Care 10 10
..................................................
Consumer 17 14
..................................................
Technology 6 9
..................................................
Business Services 32 31
..................................................
Energy 6 6
..................................................
Industrial 9 9
..................................................
Basic Materials 2 3
..................................................
Reserves 9 8
- --------------------------------------------------
Total 100.0% 100.0%
</TABLE>
While we are still significantly underweighted in technology stocks relative to
our benchmarks and many other growth stock funds, we have modestly increased our
exposure, particularly in areas such as semiconductors, where stocks are down as
much as 50% from their highs. We remain cautious, nevertheless, because we view
the technology sector as very cyclical, as we have discussed in previous
reports. This year's decline in technology issues was precipitated primarily by
a slowdown in demand growth; margins, however, are still near record (and
unsustainably high) levels for most of these companies. Still, we believe that
many areas of technology will experience tremendous growth in the years ahead,
and the stocks will bottom well ahead of industry fundamentals. We will
continue to pursue an incremental approach, adding to our positions as the
stocks adjust.
Within the business services sector, we added to our holdings in cellular
telephone service providers. Although the growth rates of these companies are
beginning to slow, many are still increasing their revenues and cash flows well
in excess of 40% annually. The market is concerned that the new competitors
recently licensed by the Federal Trade Commission (FTC) will pressure existing
operators. While this may well happen, the established cellular companies have
several advantages the upstarts lack including infrastructure, customers,
revenues, cash flows, and, in some cases, visible earnings. The companies we
own are focused on rural
3
<PAGE>
America, where we believe cellular has an advantage over the technology of their
newest competitors. Many of these rural cellular stocks are trading near three-
year lows.
OUTLOOK
For the last 18 months, we have experienced investment nirvana: an economy
growing fast enough to drive increasing corporate profits, but (until recently)
growing slowly enough to keep interest rates down. We see some challenges
looming. Interest rates have risen significantly without disturbing a somewhat
speculative stock market, and we wonder how long this can persist. The
political pendulum seems to be reversing: hostility toward business and the
investment community has been manifested lately in several FTC rulings, the
Clinton Administration's resolute opposition to capital gains tax reduction, and
in legislation increasing the minimum wage. There is also nascent evidence that
the widespread corporate cost-cutting initiatives of recent years, which have
driven corporate profits and, to some extent, the stock market, are winding down
or possibly reversing. One final, critical issue to monitor is inflation. While
we do not expect a resurgence, there are disquieting signs in the labor and
commodities markets, and we believe that we have seen the lows in inflation for
this cycle.
We would not be surprised to encounter a stock market correction, but we remain
optimistic about the long-term prospects for mid-cap growth companies. The
growth rates of our portfolio companies are significantly above the market as a
whole, yet their average price/earnings ratio is only modestly higher. As this
long expansion ages, we believe investors will increasingly seek the consistent
earnings gains of true growth stocks.
Respectfully submitted,
/s/ Brian W. H. Berghuis
Brian W. H. Berghuis
President and
Chairman of the Investment Advisory Committee
July 15, 1996
4
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio Highlights
- --------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/96
- --------------------------------------------------------------------
<S> <C>
ADT 2.5%
....................................................................
Cardinal Health 1.8
....................................................................
Quorum Health Group 1.8
....................................................................
ACE Limited 1.8
....................................................................
Circuit City Stores 1.7
- --------------------------------------------------------------------
National Data 1.7
....................................................................
TriMas 1.7
....................................................................
SunGard Data Systems 1.7
....................................................................
Danaher 1.7
....................................................................
Smith International 1.6
- --------------------------------------------------------------------
Boston Chicken 1.6
....................................................................
Olsten 1.6
....................................................................
Weatherford Enterra 1.5
....................................................................
Apria Healthcare 1.5
....................................................................
OEA 1.5
- --------------------------------------------------------------------
Vanguard Cellular 1.5
....................................................................
Franklin Resources 1.5
....................................................................
Cox Communications 1.5
....................................................................
Great Lakes Chemical 1.4
....................................................................
USA Waste Services 1.4
- --------------------------------------------------------------------
PriceCostco 1.4
....................................................................
Eckerd 1.4
....................................................................
PartnerRe Holdings 1.4
....................................................................
Republic Industries 1.3
....................................................................
Cooper Cameron 1.3
- --------------------------------------------------------------------
Total 39.8%
</TABLE>
5
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Portfolio Highlights
- -------------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended June 30, 1996
Ten Best Contributors Ten Worst Contributors
---------------------------------------------------------------------
<S> <C> <C> <C>
Republic Industries* 19c St. Jude Medical -8c
............................ .......................................
National Data 17 Mobile Telecommunication Tech.** 7
............................ .......................................
HFS 14 Alliance Entertainment * 7
............................ .......................................
USA Waste Services 14 Revco 7
............................ .......................................
ADT 14 Broderbund Software 6
............................ .......................................
Danaher 12 ADVO 6
............................ .......................................
Cardinal Health 11 Exide * 6
............................ .......................................
SunGard Data Systems 11 Adobe Systems 5
............................ .......................................
Kohl's 11 General Nutrition 5
............................ .......................................
OEA 11 PacifiCare Health Systems 5
---------------------------- ---------------------------------------
Total 134c Total -62c
</TABLE>
12 Months Ended June 30, 1996
<TABLE>
<CAPTION>
Ten Best Contributors Ten Worst Contributors
---------------------------------------------------------------------
<S> <C> <C> <C>
HFS 45c Mobile Telecommunication Tech. ** -17c
............................ .......................................
ADT 25 Office Depot ** 7
............................ .......................................
Tommy Hilfiger 23 Alliance Entertainment * 7
............................ .......................................
Guidant ** 20 Broderbund Software 6
............................ .......................................
Republic Industries * 19 Exide * 6
............................ .......................................
Smith International 19 American Portable Telecom * 5
............................ .......................................
National Data 17 Adobe Systems 4
............................ .......................................
Kohl's 16 Altera 3
............................ .......................................
Catalina Marketing 16 Albany International ** 2
............................ .......................................
Cardinal Health 15 Rustenburg Platinum * 2
---------------------------- ---------------------------------------
Total 215c Total -59c
</TABLE>
* Position added
** Position eliminated
6
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------
This chart shows the value of a hypothetical $10,000 investment in the fund over
the past 10 fiscal year periods or since inception (for funds lacking 10-year
records). The result is compared with a broad-based average or index. The index
return does not reflect expenses, which have been deducted from the fund's
return.
[MID-CAP GROWTH FUND APPEARS 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.
<TABLE>
<CAPTION>
Since Inception
Periods Ended 6/30/96 1 Year 3 Years Inception Date
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mid-Cap Growth Fund 34.45% 22.45% 25.92% 6/30/92
.............................................................................
</TABLE>
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
7
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
Unaudited
<TABLE>
<CAPTION>
Financial Highlights For a share outstanding throughout each period
- -------------------------------------------------------------------------------------
6 Months Year 6/30/92
Ended Ended to
6/30/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 20.13 $ 14.85 $ 15.18 $ 12.27 $ 10.00
..........................................................
Investment activities
Net investment income 0.05 - -* -* 0.01*
Net realized and
unrealized gain (loss) 2.59 6.07 0.04 3.21 2.44
..........................................................
Total from
investment activities 2.64 6.07 0.04 3.21 2.45
..........................................................
Distributions
Net realized gain - (0.79) (0.37) (0.30) (0.18)
..........................................................
NET ASSET VALUE
End of period $ 22.77 $ 20.13 $ 14.85 $ 15.18 $ 12.27
----------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
<S> <C> <C> <C> <C> <C>
Total return 13.11% 40.95% 0.29%* 26.24%* 24.54%*
.......................................................................................
Ratio of expenses to
average net assets 1.01%+ 1.25% 1.25%* 1.25%* 1.25%+*
.......................................................................................
Ratio of net investment
income to average
net assets 0.37%+ (0.01)% 0.02%* (0.12)%* 0.16%+*
.......................................................................................
Portfolio turnover rate 36.8%+ 57.5% 48.7% 62.4% 51.9%+
.......................................................................................
Average commission
rate paid $ 0.1074 - - - -
.......................................................................................
Net assets, end of period
(in thousands) $ 654,698 $ 263,987 $ 100,523 $ 65,426 $ 27,606
.......................................................................................
</TABLE>
* Excludes expenses in excess of a 1.25% voluntary expense limitation in effect
through 12/31/95.
+ Annualized.
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
Unaudited June 30, 1996
<TABLE>
<CAPTION>
Statement of Net Assets Shares/Par Value
- --------------------------------------------------------------------
In thousands
Common Stocks 91.4%
FINANCIAL 9.6%
<S> <C> <C>
Bank and Trust 0.9%
Marshall & Ilsley 210,000 $ 5,841
....................................................................
5,841
............
Insurance 5.3%
ACE Limited 250,000 11,750
....................................................................
PartnerRe Holdings ADR 300,000 8,981
....................................................................
PMI Group 200,000 8,500
....................................................................
Zurich Reinsurance 170,000 5,355
....................................................................
34,586
............
Financial Services 3.4%
Franklin Resources 160,000 9,760
....................................................................
Money Store 325,000 7,130
....................................................................
Oxford Resources (Class A) * 225,000 5,273
....................................................................
22,163
............
Total Financial 62,590
............
HEALTH CARE 10.3%
Pharmaceuticals 0.4%
Medeva ADR 175,000 2,712
....................................................................
2,712
............
Biotechnology 1.3%
Biogen * 150,000 8,203
....................................................................
8,203
............
Medical Instruments and Devices 2.4%
St. Jude Medical * 250,000 8,344
....................................................................
Sybron International * 300,000 7,500
....................................................................
15,844
............
Health Care Services 6.2%
Apria Healthcare * 320,000 10,040
....................................................................
Cardinal Health 165,000 11,901
....................................................................
PacifiCare Health Systems (Class B) * 100,000 6,787
....................................................................
Quorum Health Group * 450,000 11,869
....................................................................
40,597
............
Total Health Care 67,356
............
</TABLE>
9
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------
In thousands
<S> <C> <C>
CONSUMER 13.5%
Soft Goods Retailers 1.1%
Kohl's * 200,000 $ 7,325
....................................................................
7,325
............
Hard Goods Retailers 6.7%
Circuit City Stores 310,000 11,199
....................................................................
Eckerd * 400,000 9,050
....................................................................
General Nutrition * 220,000 3,836
....................................................................
PriceCostco * 425,000 9,137
....................................................................
Revco * 300,000 7,163
....................................................................
Rite Aid 115,000 3,421
............
43,806
Consumer Non-Durables 1.9%
Tommy Hilfiger * 100,000 5,362
....................................................................
Tupperware * 175,000 7,394
....................................................................
12,756
............
Restaurants 1.6%
Boston Chicken * 325,000 10,542
....................................................................
10,542
............
Consumer Services 2.2%
America Online * 18,400 803
....................................................................
CUC International * 190,000 6,745
....................................................................
La Quinta Inns 200,000 6,700
....................................................................
14,248
....................................................................
Total Consumer 88,677
............
TECHNOLOGY 8.6%
Computer Software 5.1%
Adobe Systems 150,000 5,353
....................................................................
BMC Software * 90,000 5,366
....................................................................
Broderbund Software * 100,000 3,238
....................................................................
Informix * 100,000 2,244
....................................................................
Intuit * 145,000 6,815
....................................................................
PLATINUM technology * 360,000 5,422
....................................................................
Synopsys * 125,000 4,984
....................................................................
33,422
............
</TABLE>
10
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------
In thousands
<S> <C> <C>
Networking and Telecom Equipment 1.2%
Ascend Communications * 30,000 $ 1,686
....................................................................
Shiva * 75,000 6,000
....................................................................
7,686
............
Semiconductors 2.3%
Altera * 125,000 4,742
....................................................................
Maxim Integrated Products * 160,000 4,370
....................................................................
Xilinx * 190,000 6,021
....................................................................
15,133
............
Total Technology 56,241
............
BUSINESS SERVICES 31.5%
Telecom Services 8.5%
360 Communications * 300,000 7,200
....................................................................
American Portable Telecom * 480,500 5,045
....................................................................
Comcast (Class A Special) 370,000 6,799
....................................................................
Cox Communications (Class A) * 450,000 9,731
....................................................................
Palmer Wireless * 325,000 6,561
....................................................................
Telephone and Data Systems 170,000 7,650
....................................................................
U. S. Cellular * 90,000 2,790
....................................................................
Vanguard Cellular (Class A) * 450,000 9,872
....................................................................
55,648
............
Computer Services 5.6%
BDM International * 155,000 7,208
....................................................................
Ceridian * 149,400 7,545
....................................................................
National Data 325,000 11,131
....................................................................
SunGard Data Systems * 275,000 11,017
....................................................................
36,901
............
Distribution 3.7%
Airgas * 400,000 7,600
....................................................................
Alco Standard 140,000 6,335
....................................................................
Alliance Entertainment * 425,000 2,922
....................................................................
JP Foodservice * 137,600 3,388
....................................................................
MSC (Class A) * 115,000 3,709
....................................................................
23,954
............
</TABLE>
11
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------
In thousands
<S> <C> <C>
Media and Advertising 2.4%
ADVO 225,000 $ 2,334
....................................................................
Catalina Marketing * 75,000 6,862
....................................................................
Scholastic * 110,000 6,848
....................................................................
16,044
............
Environmental 4.5%
Philip Environmental * 650,000 5,119
....................................................................
Republic Industries * 300,000 8,756
....................................................................
Sanifill * 125,000 6,156
....................................................................
USA Waste Services * 310,000 9,184
....................................................................
29,215
............
Miscellaneous Business Services 6.8%
ADT * 850,000 16,044
....................................................................
Career Horizons * 105,000 3,675
....................................................................
Corporate Express * 160,000 6,410
....................................................................
HFS * 115,000 8,050
....................................................................
Olsten 350,000 10,281
....................................................................
44,460
............
Total Business Services 206,222
............
ENERGY 6.2%
Energy Services 6.2%
Camco International 175,000 5,928
....................................................................
Cooper Cameron * 200,000 8,750
....................................................................
Halliburton 100,000 5,550
....................................................................
Smith International * 350,000 10,544
....................................................................
Weatherford Enterra * 335,000 10,050
....................................................................
Total Energy 40,822
............
INDUSTRIAL 8.8%
Automobiles and Related 2.1%
Exide 150,000 3,638
....................................................................
OEA 265,000 9,937
....................................................................
13,575
............
Specialty Chemicals 2.1%
Great Lakes Chemical 150,000 9,338
....................................................................
Polymer Group * 254,000 4,445
....................................................................
13,783
............
</TABLE>
12
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------
In thousands
<S> <C> <C>
Machinery 4.6%
Danaher 250,000 $ 10,875
....................................................................
Teleflex 174,500 8,332
....................................................................
TriMas 475,000 11,103
....................................................................
30,310
............
Total Industrial 57,668
............
BASIC MATERIALS 2.7%
Mining 2.7%
Cambior 400,000 5,350
....................................................................
Pegasus Gold * 375,000 4,594
....................................................................
Rustenberg Platinum (ZAR) 201,356 3,137
....................................................................
TVX Gold * 650,000 4,712
....................................................................
Total Basic Materials 17,793
............
Miscellaneous Common Stocks 0.2% 1,260
............
Total Common Stocks (Cost $524,164) 598,629
............
Short-Term Investments 9.0%
U.S. Government Agency
Obligations 6.7%
Federal Farm Credit Bank Discount
Notes, 5.20%
7/1/96-7/19/96 $ 9,295,000 9,282
....................................................................
Federal Home Loan Mortgage Discount
Notes 5.27-5.52%, 7/1/96-7/31/96 24,489,000 24,441
....................................................................
Federal National Mortgage Association
Discount Notes 10,000,000 9,948
5.19-5.30%, 7/30/96-8/13/96
....................................................................
43,671
............
U.S. Government Obligations 2.3%
United States Treasury Bills,
5.005-5.04%, 7/5/96-9/12/96 15,000,000 14,905
....................................................................
14,905
............
Total Short-Term Investments (Cost $58,576) 58,576
............
</TABLE>
13
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
- --------------------------------------------------------------------
In thousands
<S> <C>
Total Investments in Securities
100.4% of Net Assets (Cost $582,740) $ 657,205
Other Assets Less Liabilities (2,507)
...............
NET ASSETS $ 654,698
---------------
Net Assets Consist of:
Accumulated net investment income - net
of distributions $ 1,434
Accumulated net realized gain/loss - net
of distributions 20,009
Net unrealized gain (loss) 74,466
Paid-in-capital applicable to 28,748,475
shares of $0.01 par value capital stock
outstanding; 1,000,000,000 shares authorized 558,789
...............
NET ASSETS $ 654,698
---------------
NET ASSET VALUE PER SHARE $ 22.77
---------------
</TABLE>
* Non-income producing
ZAR South African rand
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
Unaudited
<TABLE>
<CAPTION>
Statement of Operations
- --------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/96
<S> <C>
Investment Income
Income
Dividend $ 1,699
Interest 1,357
...........
Total income 3,056
...........
Expenses
Investment management 1,557
Shareholder servicing 492
Custody and accounting 64
Registration 59
Prospectus and shareholder reports 36
Legal and audit 11
Directors 6
Miscellaneous 7
...........
Total expenses 2,232
...........
Net investment income 824
...........
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 16,919
Foreign currency transactions (7)
...........
Net realized gain (loss) 16,912
...........
Change in net unrealized gain or loss on securities 27,774
...........
Net realized and unrealized gain (loss) 44,686
...........
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 45,510
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
Unaudited
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- --------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/96 12/31/95
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ 824 $ (22)
Net realized gain (loss) 16,912 11,953
Change in net unrealized gain or loss 27,774 38,138
.....................
Increase (decrease) in net assets
from operations 45,510 50,069
.....................
Distributions to shareholders
Net realized gain - (9,790)
.....................
Capital share transactions *
Shares sold 395,522 153,457
Distributions reinvested - 9,273
Shares redeemed (50,913) (39,545)
.....................
Increase (decrease) in net assets from
capital share transactions 344,609 123,185
.....................
Net equalization 592 -
.....................
Net Assets
Increase (decrease) during period 390,711 163,464
Beginning of period 263,987 100,523
.....................
End of period $ 654,698 $ 263,987
---------------------
* Share information
Shares sold 17,981 8,079
Distributions reinvested - 468
Shares redeemed (2,344) (2,204)
.....................
Increase (decrease) in shares outstanding 15,637 6,343
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
Unaudited June 30, 1996
Notes to Financial Statements
- --------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Mid-Cap Growth, 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, 1992.
Valuation Equity securities listed or regularly traded on a securities exchange
are valued at the last quoted sales price at the time 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 that are not traded on a particular day and securities that
are 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.
Short-term debt securities are valued at their cost which, when combined with
accrued interest, approximates fair value.
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
17
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
regulations and may differ from those determined in accordance with generally
accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $390,405,000 and $74,570,000, respectively, for the
six months ended June 30, 1996.
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, 1996, the aggregate cost of investments for federal income tax
and financial reporting purposes was $582,740,000, and net unrealized gain
aggregated $74,465,000, of which $88,297,000 related to appreciated
investments and $13,832,000 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 $352,000 was payable at June 30, 1996. The fee is computed
daily and paid monthly, and consists 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 0.305% for assets in excess
of $50 billion. At June 30, 1996, and for the six months then ended, the
effective annual group fee rate was 0.33% and 0.34%, respectively. The fund
pays a pro rata share of the group fee based on the ratio of its net assets
to those of the group.
Under the terms of the investment management agreement, the manager was
required to bear any expenses through December 31, 1995, which would cause
the fund's ratio of expenses to average net assets to exceed 1.25%.
Thereafter, through December 31, 1997, the fund is required to reimburse the
manager for
18
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------
these expenses, provided that average net assets have grown or expenses have
declined sufficiently to allow reimbursement without causing the fund's ratio of
expenses to average net assets to exceed 1.25%. Pursuant to this agreement,
$58,000 of unaccrued 1994-1995 fees were repaid during the six months ended June
30, 1996.
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 $413,000 for the six months
ended June 30, 1996, of which $15,000 was receivable at period-end.
19
<PAGE>
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------
To help shareholders monitor their current investments and make decisions that
accurately reflect their financial goals, T. Rowe Price offers a wide variety of
information and services -- at no extra cost.
KNOWLEDGEABLE SERVICE REPRESENTATIVES
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10
p.m. 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.
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/(R)/ and T. Rowe Price
OnLine.
DISCOUNT BROKERAGE*
Individual Securities Stocks, bonds, options, precious metals, and other
securities at a savings over regular commission rates.
INVESTMENT INFORMATION
Combined Statement An overview of your T. Rowe Price accounts.
Shareholder Reports Fund managers' reviews of their strategies and results.
The T. Rowe Price Report A 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, Personal
Strategy Planner, Retirees Financial Guide, and Retirement Planning Kit.
*T. Rowe Price Discount Brokerage is a division of T. Rowe Price Investment
Services, Inc. Member NASD/SIPC.
20
<PAGE>
T. Rowe Price Mutual Funds
- --------------------------------------------------------------------
STOCK FUNDS
......................
Domestic
Balanced
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Dividend Growth
Equity Income
Equity Index
Growth & Income
Growth Stock
Health Sciences
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
OTC
Science & Technology
Small-Cap Value*
Spectrum Growth
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
BOND FUNDS
......................
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Insured
Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term
Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term
Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Emerging Markets Bond
Global Government Bond
International Bond
Short-Term Global Income
MONEY MARKET
......................
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
......................
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
......................
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
New America Growth Portfolio
Personal Strategy Balanced
Portfolio
*Closed to new investors.
<PAGE>
For yield, price, last transaction,
and current balance, 24 hours,
7 days a week, call:
1-800-638-2587 toll free
For assistance with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution
only to shareholders and to others who have
received a copy of the prospectus of the
T. Rowe Price Mid-Cap Growth Fund(R).
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor RPRTMCG 6/30/96
