<PAGE>
Semiannual Report
MID-CAP
GROWTH
FUND
- -------------
June 30, 1997
- -------------
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price
<PAGE>
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
Mid-Cap Growth Fund
. Stocks advanced sharply in the second quarter to provide stellar returns for
the first half; mid-cap stocks rose but not as much as large-cap, blue chip
stocks.
. The fund's return for the first six months did not keep pace with its mid-cap
benchmarks, as value stocks outperformed growth stocks in the mid-cap market
sector.
. A number of holdings benefited from merger and acquisition activity,
testifying to the attractive values among mid-cap stocks. Three large retail
holdings were top contributors.
. While it is difficult to see what might derail this stock market, we are
cautious in light of the current high valuations. Mid-cap stock valuations
are somewhat less extended, and we are optimistic for both the near and long
term.
<PAGE>
Fellow Shareholders
After a dull first quarter, stocks surged during the second. Mid-cap stocks
participated in the rebound but lagged behind their larger brethren by
significant margins for the 6- and 12-month periods ending June 30. Moreover,
mid-cap growth stocks, exemplified by your fund, in turn trailed mid-cap value
stocks for both periods, which was the primary reason the fund lagged its mid-
cap benchmarks in recent months.
In ordinary times, we would be very satisfied with your fund's return over the
last year. After all, the Mid-Cap Growth Fund's absolute gain of 17.23% is well
above the stock market's historical norm for a 12-month period and above its
peer group average. However, the extraordinary advance of the unmanaged
Standard & Poor's 500 Stock Index, led primarily by large blue chip companies,
makes us feel as though we were not invited to the party. Amid the
disappointing recent performance of the mid-cap sector, it is worth noting that
mid-caps have historically outperformed large-caps over longer periods. Indeed,
your fund's return of 194.70% over the last five years easily exceeds the
146.55% gain of the S&P 500. (See page 7 for more performance information.)
PERFORMANCE COMPARISON
<TABLE>
<CAPTION>
Periods Ended 6/30/97 6 Months 12 Months
- ---------------------------------------------------------------
<S> <C> <C>
Mid-Cap Growth Fund 6.22% 17.23%
...............................................................
S&P MidCap Index 12.99 23.33
...............................................................
Lipper Mid Cap Funds Average 9.09 15.61
...............................................................
S&P 500 20.61 34.70
...............................................................
</TABLE>
MARKET ENVIRONMENT
Stock market investors have been treated to exemplary returns against the best
market backdrop in years. The economic expansion is in its seventh year and,
after growing a little too fast in the first quarter of 1997, seems to have
moderated recently. Thus, we have an ideal environment where the economy is
growing fast enough to accommodate good corporate earnings growth, yet slow
enough to allay fears of an impending inflationary surge. The U.S. inflation
rate appears benign and has actually declined slightly in spite of a reasonably
tight job market. In Washington, politicians are still squabbling, but there
1
<PAGE>
appears to be a movement by both parties toward the middle of the political
spectrum, at least on economic issues. Both parties appear to agree on some
measure of capital gains tax reduction. Meanwhile, the federal budget deficit
has declined so fast that extrapolating budget surpluses in the years ahead may
no longer be a fantastic notion. Globally, we are in the midst of a relatively
peaceful period in which capitalism and democracy are ascendent. Consumer
confidence is at record highs, and individual investors continue to pour money
into equity mutual funds. Despite vibrant demand for new equity offerings,
corporate stock buybacks and record merger and acquisition activity are retiring
stock as fast as it is issued.
After 1995 and 1996, when the S&P 500 posted a cumulative gain of 69.7% -- its
third-best two-year return in six decades -- many observers, ourselves included,
believed the market was due for a pause. While the market did correct almost 10%
in March and April, it raced back to close with a strong gain for the first half
of 1997. Large-cap companies led the way, as investors continued to be enamored
of franchise brands like Coca-Cola, Procter & Gamble, and GE. Small and mid-cap
companies lagged the rally by a significant margin. In the mid-cap sector, value
performed better than growth, an anomalous situation because the reverse was
true in the large-cap arena.
PORTFOLIO REVIEW
The portfolio had less divergence than usual among industry groups in the first
half, though significant volatility led to notable contributions and
detractions. Three retailers were among the fund's top 10 contributors in the
first half of 1997. General Nutrition, the nation's largest retailer of vitamin
and other health-related products and a long-time holding, was the fund's top
performer as the company rebounded from a temporary sales slowdown in mid-1996.
Costco, the nation's leading warehouse club operator, and Kohl's, a major
discount department store, also reported strong earnings gains and performed
well. Cooper Cameron and Smith International, both energy service companies,
were the top contributors for the 12-month period. These companies benefited
from extremely strong demand for products and services that assist oil
exploration and production companies in the drilling process.
Unfortunately, gains from these stocks were offset by several very disappointing
stocks. Foremost was Mercury Finance, a leader in used car automobile lending.
Along with other investors, we were victimized
2
<PAGE>
by suspected management fraud and manipulation of financial statements, and are
seeking redress through legal action. The fund was also hurt in the first half
by its position in Boston Chicken, a restaurant operator whose stock fell when
an unanticipated sales slowdown precipitated a reevaluation by investors of what
was, in hindsight, an overly aggressive expansion plan and a problematic
financial structure. The second-worst detractor for the 12-month period was
Shiva, a networking company, which stumbled in a product line transition.
The market has not treated the mid-cap growth sector well over the last year,
but it is worth noting that corporate buyers do appear to recognize value in the
sector as takeover activity in our portfolio is easily at its highest level in
five years. Portfolio companies acquired in the last several quarters include
ADT, Revco, Eckerd, Oxford Resources, Career Horizons, Cascade Communications,
and Vivra. The acquisition of Palmer Wireless is pending. We do not actively
purchase companies we believe may be acquired, but we do view this flurry of
activity as a reaffirmation of the current relative attractiveness of the mid-
cap sector.
Your fund remains well diversified across sectors. We have made only modest
changes in the last six months, as shown in the table.
- -----------------------
Sector Diversification
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of Percent of
Net Assets Net Assets
12/31/96 6/30/97
- ---------------------------------------------------------
<S> <C> <C>
Financial 10% 9%
.........................................................
Health Care 9 10
.........................................................
Consumer 19 18
.........................................................
Technology 8 7
.........................................................
Business Services 28 28
.........................................................
Energy 6 7
.........................................................
Industrial 8 10
.........................................................
Basic Materials 2 3
.........................................................
Reserves 10 8
- ---------------------------------------------------------
Total 100% 100%
</TABLE>
OUTLOOK
As mentioned earlier, a combination of factors -- moderate domestic economic
growth, low inflation and interest rates, growing corporate earnings, rapidly
declining budget deficits, and a benign global political environment -- present
a very favorable backdrop for the stock market, in our opinion. It is difficult
to envisage a major stock market setback in this context. However, stock
valuations are high by
3
<PAGE>
historical standards using benchmarks such as price/earnings ratios, price/book
value ratios, and dividend yields. The Leuthold Group reports that the 15-year
compound annual return for the S&P 500 as of June 30 was 18.8%, the best such
period ever recorded, far above the 10.7% 1926-to-date median.
Perhaps we have entered a "new era" of peace and prosperity. However, students
of the stock market know from experience that the most dangerous phrase in the
language is "this time it's different." After all, the stock market reflects
human emotion, which can vary greatly over long periods.
It is interesting to note that small- and mid-cap stocks often lead in the
latter stages of bull markets, yet this has not been the case recently.
Nevertheless, with blue chip stocks trading at price/earnings ratios well above
their growth rates, it is possible the sector many now consider the "safest" --
the large blue chips -- may actually be the riskiest. While we are not sure
what catalyst may come along to change the leadership of the market, the
relative values in the mid-cap sector appear attractive, though absolute
valuations are high by historical standards.
We remain optimistic about the long-term prospects for mid-cap companies. The
aggregate underlying growth rate of our portfolio companies is well in excess of
the market as a whole, yet the price/earnings ratio is only modestly higher than
the market and well below many of the blue chip leaders. Over the long run, we
believe your fund is well positioned to achieve attractive returns.
Respectfully submitted,
/s/ Brian W. H. Berghuis
Brian W. H. Berghuis
President and Chairman of the Investment Advisory Committee
July 14, 1997
4
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
- --------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/97
- --------------------------------------------------------------------------------
<S> <C>
ACE Limited 2.1%
................................................................................
Warnaco Group 2.0
................................................................................
TriMas 1.8
................................................................................
Danaher 1.8
................................................................................
Smith International 1.7
- --------------------------------------------------------------------------------
Interim Services 1.7
................................................................................
Camco International 1.6
................................................................................
Franklin Resources 1.6
................................................................................
BE Aerospace 1.5
................................................................................
Gartner Group 1.5
- --------------------------------------------------------------------------------
Sybron International 1.5
................................................................................
Great Lakes Chemical 1.5
................................................................................
Quorum Health Group 1.5
................................................................................
General Nutrition 1.5
................................................................................
JP Foodservice 1.4
- --------------------------------------------------------------------------------
La Quinta Inns 1.4
................................................................................
PartnerRe Holdings 1.4
................................................................................
Cooper Cameron 1.4
................................................................................
Catalina Marketing 1.4
................................................................................
Teleflex 1.4
- --------------------------------------------------------------------------------
Ikon Office Solutions 1.3
................................................................................
Money Store 1.3
................................................................................
Circuit City Stores 1.3
................................................................................
Stewart Enterprises 1.2
................................................................................
Costco Companies 1.2
- --------------------------------------------------------------------------------
Total 38.0%
</TABLE>
5
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
- --------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
<TABLE>
<CAPTION>
6 Months Ended 6/30/97
Ten Best Contributors Ten Worst Contributors
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
General Nutrition 18 cents Mercury Finance -31 cents
........................................................ ..........................................................
Gartner Group * 17 Boston Chicken 22
........................................................ ..........................................................
Franklin Resources 17 Ikon Office Solutions 11
........................................................ ..........................................................
Oxford Resources *** 12 Network General 11
........................................................ ..........................................................
ADT ** 12 360 Communications 11
........................................................ ..........................................................
Smith International 12 Tupperware ** 10
........................................................ ..........................................................
ACE Limited 10 Scholastic ** 10
........................................................ ..........................................................
Costco Companies 9 Corporate Express 9
........................................................ ..........................................................
Kohl's 9 FORE Systems ** 9
........................................................ ..........................................................
Interim Services 9 TVX Gold 8
- -------------------------------------------------------- ----------------------------------------------------------
Total 125 cents Total -132 cents
</TABLE>
<TABLE>
<CAPTION>
12 Months Ended 6/30/97
Ten Best Contributors Ten Worst Contributors
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cooper Cameron 29 cents Mercury Finance * -28 cents
........................................................ ..........................................................
Smith International 27 Shiva ** 21
........................................................ ..........................................................
ACE Limited 23 Apria Healthcare 17
........................................................ ..........................................................
ADT ** 21 Boston Chicken 17
........................................................ ..........................................................
Franklin Resources 20 Corporate Express 16
........................................................ ..........................................................
Cardinal Health 20 360 Communications 11
........................................................ ..........................................................
Oxford Resources *** 19 Intuit 10
........................................................ ..........................................................
Revco ** 17 Vanguard Cellular 10
........................................................ ..........................................................
Gartner Group * 17 Olsten ** 9
........................................................ ..........................................................
General Nutrition 17 FORE Systems ** 8
- -------------------------------------------------------- ----------------------------------------------------------
Total 210 cents Total -147 cents
</TABLE>
* Position added
** Position eliminated
*** Acquired by another company
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.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
DATE S&P MIDCAP INDEX LIPPER MID CAP FUNDS MID-CAP GROWTH FUND
<S> <C> <C> <C>
6/30/92 10,000 10,000 10,000
6/30/93 12,269 12,399 13,692
6/30/94 12,262 12,611 14,810
6/30/95 15,002 15,748 18,698
6/30/96 18,241 19,759 25,139
6/30/97 22,496 22,862 29,470
</TABLE>
- ------------------------------------
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 6/30/97 1 Year 3 Years 5 Years Inception Date
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mid-Cap Growth Fund 17.23% 25.78% 24.13% 24.13% 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
- --------------------
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 Months Year 6/30/92
Ended Ended Through
6/30/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 24.43 $ 20.13 $ 14.85 $ 15.18 $ 12.27 $ 10.00
......................................................................................
Investment activities
Net investment income (0.02) (0.01) - -* -* 0.01*
Net realized and
unrealized gain (loss) 1.54 5.00 6.07 0.04 3.21 2.44
......................................................................................
Total from
investment activities 1.52 4.99 6.07 0.04 3.21 2.45
......................................................................................
Distributions
Net realized gain - (0.69) (0.79) (0.37) (0.30) (0.18)
......................................................................................
NET ASSET VALUE
End of period $ 25.95 $ 24.43 $ 20.13 $ 14.85 $ 15.18 $ 12.27
--------------------------------------------------------------------------------------
Ratios/Supplemental Data
Total return 6.22% 24.84% 40.95% 0.29%* 26.24%* 24.54%*
..............................................................................................................................
Ratio of expenses to
average net assets 1.00%+ 1.04% 1.25% 1.25%* 1.25%* 1.25%*+
..............................................................................................................................
Ratio of net investment
income to average
net assets (0.18)%+ (0.11)% (0.01)% 0.02%* (0.12)%* 0.16%*+
..............................................................................................................................
Portfolio turnover rate 46.1%+ 38.1% 57.5% 48.7% 62.4% 51.9%+
..............................................................................................................................
Average commission
rate paid $ 0.0511 $ 0.0531 - - - -
..............................................................................................................................
Net assets, end of period
(in millions) $ 1,345 $ 1,021 $ 264 $ 101 $ 65 $ 28
..............................................................................................................................
</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, 1997
<TABLE>
<CAPTION>
- -----------------------
Statement of Net Assets Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Common Stocks 91.8%
FINANCIAL 9.4%
Insurance 4.4%
ACE Limited 375,000 $ 27,703
...............................................................................
PartnerRe Holdings 500,000 19,063
...............................................................................
PMI Group 200,000 12,475
...............................................................................
59,241
............
Financial Services 5.0%
Fairfax Financial (144a) (CAD) * 48,000 13,903
...............................................................................
Franklin Resources 300,000 21,769
...............................................................................
Mercury Finance 500,000 1,219
...............................................................................
Money Store 600,000 17,156
...............................................................................
Nationwide Financial Services (Class A) 515,000 13,680
............
67,727
............
Total Financial 126,968
............
HEALTH CARE 10.1%
Biotechnology 2.0%
Biogen * 400,000 13,562
...............................................................................
Gilead Sciences * 500,000 13,844
...............................................................................
27,406
............
Medical Instruments and Devices 3.2%
St. Jude Medical * 375,000 14,625
...............................................................................
Sybron International * 510,000 20,336
...............................................................................
United States Surgical 225,600 8,404
...............................................................................
43,365
............
Health Care Services 4.9%
Apria Healthcare * 136,600 2,424
...............................................................................
Cardinal Health 215,000 12,309
...............................................................................
Covance * 825,000 15,933
...............................................................................
Quest Diagnostics * 750,000 15,422
...............................................................................
Quorum Health Group * 550,000 19,594
...............................................................................
65,682
............
Total Health Care 136,453
............
</TABLE>
9
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
CONSUMER 17.2%
Soft Goods Retailers 2.3%
Gymboree * 650,000 $ 15,580
...............................................................................
Kohl's * 300,000 15,881
...............................................................................
31,461
............
Hard Goods Retailers 5.1%
Circuit City Stores 475,000 16,892
...............................................................................
Costco Companies * 500,000 16,453
...............................................................................
General Nutrition * 700,000 19,556
...............................................................................
Waban * 500,000 16,094
...............................................................................
68,995
............
Consumer Non-Durables 3.4%
American Pad & Paper * 685,500 11,568
...............................................................................
Consolidated Cigar Holdings * 38,600 1,071
...............................................................................
Culligan Water Technologies * 137,400 6,149
...............................................................................
Warnaco Group (Class A) 825,000 26,297
...............................................................................
45,085
............
Restaurants 1.4%
Boston Chicken * 517,300 7,226
...............................................................................
Outback Steakhouse * 500,000 12,078
...............................................................................
19,304
............
Entertainment 1.2%
Royal Caribbean Cruises 450,000 15,722
...............................................................................
15,722
............
Consumer Services 3.8%
CUC International * 562,500 14,519
...............................................................................
La Quinta Inns 875,000 19,141
...............................................................................
Stewart Enterprises (Class A) 400,000 16,750
...............................................................................
50,410
............
Total Consumer 230,977
............
TECHNOLOGY 7.1%
Computer Software 2.9%
BMC Software * 275,000 15,245
...............................................................................
Intuit * 235,000 5,383
...............................................................................
</TABLE>
10
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
PLATINUM technology * 450,000 $ 6,019
................................................................................
Synopsys * 350,000 12,917
................................................................................
39,564
.........
Networking and Telecom Equipment 1.6%
Anixter International * 375,000 6,445
................................................................................
Cascade Communications * 250,000 6,899
................................................................................
Network General * 525,000 7,793
................................................................................
21,137
.........
Semiconductors 2.6%
Analog Devices * 408,333 10,846
................................................................................
Maxim Integrated Products * 225,000 12,783
................................................................................
Xilinx * 225,000 11,032
................................................................................
34,661
.........
Total Technology 95,362
.........
BUSINESS SERVICES 27.3%
Telecom Services 5.1%
................................................................................
360 Communications * 960,000 16,440
................................................................................
Aerial Communications * 408,200 3,521
................................................................................
Comcast (Class A Special) 650,000 13,873
................................................................................
Cox Communications (Class A) * 535,000 12,840
................................................................................
Omnipoint * 425,000 7,052
................................................................................
Palmer Wireless * 539,600 9,140
................................................................................
Vanguard Cellular (Class A) * 425,000 5,870
................................................................................
68,736
.........
Computer Services 6.5%
Affiliated Computer Services (Class A) * 525,000 14,700
................................................................................
BDM International * 550,000 12,581
................................................................................
Checkfree * 450,000 7,917
................................................................................
DST Systems * 450,000 14,991
................................................................................
National Data 325,000 14,077
................................................................................
Sterling Commerce * 250,000 8,219
................................................................................
SunGard Data Systems * 325,000 15,112
................................................................................
87,597
.........
Distribution 6.0%
Corporate Express * 969,700 13,970
................................................................................
Ikon Office Solutions 700,000 17,456
................................................................................
</TABLE>
11
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
JP Foodservice * 675,000 $19,364
................................................................................
MSC * 350,900 14,080
................................................................................
Richfood Holdings 600,000 15,600
................................................................................
80,470
.........
Media and Advertising 3.4%
................................................................................
ADVO * 225,000 3,656
................................................................................
Catalina Marketing * 387,600 18,653
................................................................................
Jacor Communications * 231,000 8,858
................................................................................
Outdoor Systems * 377,700 14,400
................................................................................
45,567
.........
Environmental 1.7%
Republic Industries * 310,000 7,711
................................................................................
USA Waste Services * 373,500 14,427
................................................................................
22,138
.........
Miscellaneous Business Services 4.6%
Fastenal 175,000 8,553
................................................................................
Gartner Group (Class A) * 575,200 20,653
................................................................................
HFS * 190,000 11,020
................................................................................
Interim Services * 500,000 22,250
................................................................................
62,476
.........
Total Business Services 366,984
.........
ENERGY 6.8%
Energy Services 5.9%
Camco International 400,000 21,900
................................................................................
Cooper Cameron * 400,000 18,700
................................................................................
Smith International * 375,000 22,781
................................................................................
Weatherford Enterra * 402,600 15,500
................................................................................
78,881
.........
Exploration and Production 0.9%
United Meridian * 400,000 12,000
................................................................................
12,000
.........
Total Energy 90,881
.........
INDUSTRIAL 9.6%
Defense and Aerospace 1.5%
BE Aerospace * 655,000 20,673
................................................................................
20,673
.........
</TABLE>
12
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Automobiles and Related 1.2%
OEA 400,000 $ 15,800
................................................................................
15,800
..........
Specialty Chemicals 1.9%
Great Lakes Chemical 388,000 20,321
................................................................................
Polymer Group * 350,000 5,644
................................................................................
25,965
..........
Machinery 5.0%
Danaher 475,000 24,136
................................................................................
Teleflex 582,800 18,213
................................................................................
TriMas 875,000 24,609
................................................................................
66,958
..........
Total Industrial 129,396
..........
BASIC MATERIALS 2.5%
Mining 2.5%
Battle Mountain Gold (Class A) 2,075,000 11,802
................................................................................
Cambior 1,000,000 11,312
................................................................................
TVX Gold * 2,050,000 10,891
................................................................................
Total Basic Materials 34,005
..........
Miscellaneous Common Stocks 1.8% 24,421
..........
Total Common Stocks (Cost $1,020,223) 1,235,447
..........
U.S. Government Obligations/
Agencies 3.0%
U.S. Treasury Notes
5.50%, 7/31/97 $10,000,000 10,000
.........................................................................
5.625%, 10/31/97 10,000,000 10,003
.........................................................................
8.50%, 7/15/97 10,000,000 10,013
.........................................................................
8.625%, 8/15/97 10,000,000 10,039
.........................................................................
Total U.S. Government Obligations/Agencies (Cost $40,054) 40,055
..........
</TABLE>
13
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Short-Term Investments 8.8%
Repurchase Agreements (S) 4.3%
Investments in Repurchase Agreements through
a Joint Account
Dated 6/30/97, 5.80%, Delivery Value
$57,951,000 on 7/1/97 $57,941,213 $ 57,941
................................................................................
57,941
...........
U.S. Government Obligations 4.5%
U.S. Treasury Bills, 4.70 - 5.125%, 7/3 - 7/10/97 20,000,000 19,985
................................................................................
19,985
...........
Total Short-Term Investments (Cost $77,926) 77,926
...........
Total Investments in Securities
100.6% of Net Assets (Cost $1,138,203) 1,353,428
Other Assets Less Liabilities (8,582)
...........
NET ASSETS $1,344,846
-----------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (1,051)
Accumulated net realized gain/loss - net of distributions 18,382
Net unrealized gain (loss) 215,225
Paid-in-capital applicable to 51,824,544 shares of $0.01
par value capital stock outstanding; 1,000,000,000
shares authorized 1,112,290
...........
NET ASSETS $1,344,846
-----------
NET ASSET VALUE PER SHARE $ 25.95
-----------
</TABLE>
* Non - income producing
(S) Fully collateralized by U.S. government securities
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers -- total of such securities at period-end amounts to
1.03% of net assets.
CAD Canadian dollar
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
Unaudited
- -----------------------
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months
Ended
6/30/97
<S> <C>
Investment Income
Income
Interest $ 3,317
Dividend 1,526
...........
Total income 4,843
...........
Expenses
Investment management 3,991
Shareholder servicing 1,582
Prospectus and shareholder reports 118
Registration 101
Custody and accounting 74
Legal and audit 6
Directors 6
Miscellaneous 16
...........
Total expenses 5,894
...........
Net investment income (1,051)
...........
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 12,051
Foreign currency transactions (11)
...........
Net realized gain (loss) 12,040
Change in net unrealized gain or loss on securities 66,814
...........
Net realized and unrealized gain (loss) 78,854
...........
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 77,803
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
Unaudited
- ----------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
6/30/97 12/31/96
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ (1,051) $ (675)
Net realized gain (loss) 12,040 31,550
Change in net unrealized gain or loss 66,814 101,719
.........................
Increase (decrease) in net assets from operations 77,803 132,594
.........................
Distributions to shareholders
Decrease in net assets from distributions - (27,658)
.........................
Capital share transactions *
Shares sold 499,070 794,631
Distributions reinvested - 26,549
Shares redeemed (253,065) (169,185)
.........................
Increase (decrease) in net assets from capital
share transactions 246,005 651,995
.........................
Net equalization - 120
.........................
Net Assets
Increase (decrease) during period 323,808 757,051
Beginning of period 1,021,038 263,987
.........................
End of period $ 1,344,846 $ 1,021,038
-------------------------
* Share information
Shares sold 20,542 35,021
Distributions reinvested - 1,102
Shares redeemed (10,509) (7,442)
.........................
Increase (decrease) in shares outstanding 10,033 28,681
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1997
- -----------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Mid-Cap 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, 1992.
Valuation Equity securities 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.
Debt securities are generally traded in the over-the-counter market and are
valued at a price deemed best to reflect fair value as quoted by dealers who
make markets in these securities or by an independent pricing service. Short-
term debt securities are valued at amortized 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.
Premiums and Discounts Premiums and discounts on debt securities are amortized
for both financial reporting and tax purposes.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
17
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
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. Effective January 1, 1997, the fund
discontinued its practice of equalization. The results of operations and net
assets were not affected by this change.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Repurchase Agreements The fund, and other affiliated funds, may transfer
uninvested cash into a joint account, the daily aggregate balance of which is
invested in one or more overnight repurchase agreements. All repurchase
agreements purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity and are fully collaterallized by U.S. government
securities. Collateral is in the possession of the fund's custodian and is
evaluated daily to ensure that its market value exceeds the delivery value of
the repurchase agreements at maturity. Although risk is mitigated by the
collateral, the fund could experience a delay in recovering its value and a
possible loss of income or value if the counterparty fails to perform in
accordance with the terms of the agreement.
Other Purchases and sales of portfolio securities, other than short-term and
U.S. government securities, aggregated $512,048,000 and $246,510,000,
respectively, for the six months ended June 30, 1997.
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, 1997, the aggregate cost of investments for federal income tax and
financial reporting purposes was $1,138,203,000, and net unrealized gain
18
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
aggregated $215,225,000, of which $269,710,000 related to appreciated
investments and $54,485,000 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 $732,000 was payable at June 30, 1997. 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 0.30% for assets in excess of $80 billion. At
June 30, 1997, and for the six months then ended, the effective annual group fee
rate was 0.33%. 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 $1,305,000 for the six months
ended June 30, 1997, of which $256,000 was payable at period-end.
19
<PAGE>
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(R) and T. Rowe Price OnLine.
DISCOUNT BROKERAGE*
Individual Investments Stocks, bonds, options, precious metals, and other
securities at a savings over regular commission rates.
INVESTMENT INFORMATION
Combined Statement Overview of your T. Rowe Price accounts.
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.
*A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
20
<PAGE>
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
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Science & Technology
Small-Cap Stock**
Small-Cap Value*
Spectrum Growth
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
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 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
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 Income
Personal Strategy Growth
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 the OTC Fund.
Please call for a prospectus. Read it carefully before you invest or send money.
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.
21
<PAGE>
For yield, price, last transaction, current balance, or to conduct transactions,
24 hours, 7 days a week, call Tele*Access(R): 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 Discount 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 of the T. Rowe Price Mid-Cap Growth
Fund.
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
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor. F64-051 6/30/97
