<PAGE>
Semiannual Report
MID-CAP
GROWTH
FUND
-------------
JUNE 30, 1998
-------------
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. ROWE PRICE
<PAGE>
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
Mid-Cap Growth Fund
. Led by large-cap stocks, the market continued its impressive gains of the
past three years, as the S&P 500 Stock Index rose 17.71% in the first half of
1998.
. The fund performed well over the past 6- and 12-month periods, outpacing
mid-cap indices and its peers in a relatively weak environment for mid-cap
stocks.
. We made only modest changes to our sector allocations; business services and
consumer stocks remain our largest holdings.
. The market overall is trading at historically high valuations, but mid-cap
valuations are close to historic lows relative to large-caps. The fund is
positioned to achieve attractive returns over the long run.
<PAGE>
FELLOW SHAREHOLDERS
After three years of stellar gains, the stock market began 1998 with a modest
sell-off but recovered quickly and climbed steadily to finish the first half
near record territory. Larger-capitalization, blue chip growth companies
continued to lead the market, as they have since 1995, with the S&P 500 Stock
Index gaining 17.71%.
- ------------------------
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
Periods Ended 6/30/98 6 Months 12 Months
- --------------------------------------------------------------------------------
Mid-Cap Growth Fund 16.61% 29.90%
................................................................................
S&P MidCap Index 8.64 27.15
................................................................................
Russell Midcap Growth Index 11.87 24.02
................................................................................
Lipper Mid Cap Fund Index 12.20 21.95
................................................................................
Small- and mid-cap companies participated in the market's advance but posted
more modest gains. The Mid-Cap Growth Fund performed relatively well during the
last 6- and 12-month periods, outperforming its two passive benchmarks as well
as a measure of other mid-cap funds, with gains of 16.61% and 29.90%,
respectively. June 30 marked your fund's sixth birthday, and we are happy to
report that it has gained 282.82% since inception, easily exceeding the 186.04%
increase of the S&P 400 MidCap Index over that period. (For the six-year
performance chart, please turn to page 7.)
MARKET ENVIRONMENT
The primary concern entering the year was the extent to which the Asian economic
crisis would affect the U.S. economy and stock market. What began in July 1997
as a currency crisis in Thailand quickly enveloped the rest of Asia. Currencies
and stock markets plunged, banks were closed, brokerages failed, and real estate
prices fell. That was only the first phase of the crisis--the financial
collapse. In 1998, we have begun to witness the economic and political
consequences, and they are severe, to say the least. Many of the region's
economies are collapsing, and depressions seem to be developing in some nations.
Major political changes are occurring in others, notably Indonesia and, perhaps,
Japan. In a perverse way, Asia's miseries have helped the U.S. stock market in
1998: the economic carnage has scared investment from Asia into the seemingly
safer U.S. market; and fears of exacerbating
1
<PAGE>
the Asian crisis and pushing an already strong dollar even higher dissuaded the
Federal Reserve from raising domestic interest rates to brake a surging domestic
economy. The crisis has hurt earnings at many U.S. companies, however.
The stock market's surge in the first half of 1998 reflects a continuation of
many of the conditions that have contributed to a nearly ideal investment
environment over the last several years. Most important, the U.S. inflation rate
continues to fall, driven by falling prices for commodities ranging from crude
oil to grain. Long-term interest rates resumed their decline, reaching nearly
5.6% in June, down from 7.2% in the spring of 1997. Meanwhile, in Washington,
both Republicans and Democrats have converged in the middle of the political
spectrum on most economic issues, facilitated by the probability of a federal
budget surplus this year for the first time since 1969. The unemployment rate
remains very low, consumer confidence is at its highest level in 29 years, and
the economy appears robust. Investors continued to pour money into equity mutual
funds.
Small- and mid-cap stocks lagged the broad market as investors gravitated toward
blue chip companies. The merger boom continued, driven by a perceived need for
economies of scale and abetted by high public valuations for many consolidators.
Although the new issue market cooled noticeably, there was frenzied speculative
activity in many of the Internet stocks. While the Internet has the potential to
change the economic paradigm in some industries, valuations have risen
indiscriminately to astounding levels for many of these companies, considering
that most have very modest revenues and rapidly changing business models.
PORTFOLIO REVIEW
- ----------------------
Mid-Cap Stock Returns
- --------------------------------------------------------------------------------
Periods Ended 6/30/98 6 Months 12 Months
- --------------------------------------------------------------------------------
Russell Midcap Index 9.13% 25.00%
................................................................................
Russell Midcap Growth Index 11.87 24.02
................................................................................
Russell Midcap Value Index 7.17 25.75
................................................................................
Amid falling interest rates and concerns about businesses with significant
foreign exposure, it is not surprising that the financial and consumer stocks
were the best-performing stock market sectors in 1998's first half. The fund's
largest contributor year-to-date was Capital One Financial, a leading credit
card issuer whose earnings greatly exceeded investor expectations. Other top
contributors included
2
<PAGE>
Galileo International, a leading centralized reservation system
provider, which benefited from high travel activity and a better
appreciation by investors of the company's strong business model;
Outdoor Systems, a consolidator in the outdoor advertising sector,
which profited from a torrid advertising environment and posted strong
earnings gains; and Royal Caribbean Cruises, a large cruise ship
operator, which experienced strong demand in addition to reaping the
rewards of successfully integrating a significant acquisition made in
mid-1997.
The worst detractor for both the 6- and 12-month periods was Smith
International, an energy services company that had graced the top
contributors table several times over the last few years. As oil prices
fell, energy stocks were hit hard, and Smith International was not
spared. We still regard the company as well managed and a leader in its
niches. Other significant detractors included Gymboree, the children's
apparel retailer, which experienced operational woes; and Security
Dynamics Technologies, a computer security provider, which is in the
midst of a product transition that has lowered earnings expectations.
It is worth noting that the current merger boom has not entirely passed
us by. In the last six months, several of our holdings have been
acquired or announced they were being acquired, including United States
Surgical, Culligan Water Technologies, 360 Communications, Camco
International, Weatherford Enterra, La Quinta Inns, and R.P. Scherer.
While the premiums we were paid varied, and only one was a top
contributor, the combined effect was clearly a factor in our recent
results.
Your fund remains well diversified across industry sectors. We have
made only modest changes in the last six months, as shown in the table
on the next page.
INVESTMENT STRATEGY AND OUTLOOK
One of the root causes of the Asian economic crisis was an apparent
overinvestment in productive capacity. With the setback in Asian
economic activity, worldwide supply exceeds demand in many industries.
This is putting downward pressure on product prices around the world.
At this point, most Americans have benefited from this phenomenon since
it has served to dampen inflation and interest rates at a point in the
economic cycle when we would normally expect them to be rising. In
light of such good fortune--a strong economy and falling
3
<PAGE>
Sector Diversification
12/31/97 6/30/98
- -----------------------------------------------------------------------
Financial 9% 11%
.......................................................................
Health Care 12 14
.......................................................................
Consumer 19 17
.......................................................................
Technology 10 11
.......................................................................
Business Services 28 29
.......................................................................
Energy 5 4
.......................................................................
Industrial 7 4
.......................................................................
Basic Materials 2 1
.......................................................................
Reserves 8 9
- -----------------------------------------------------------------------
Total 100% 100%
inflation--the stock market has reacted very favorably. However, even
as consumers continue to spend freely, pressures emanating from Asia
are beginning to assert themselves: a deluge of cheaper Asian imports
and a decline in American exports to the region are causing the U.S.
trade deficit to balloon, and American manufacturers are beginning to
see slowing demand for their products. There is evidence that U.S.
economic growth is ebbing, and this could pressure corporate profits in
the quarters ahead.
On an absolute basis, the stock market continues to trade in the upper
reaches of its historic valuation range, but low interest rates provide
some support as long as earnings growth continues. While small- and
mid-cap stocks often lead the stock market in the later stages of
market and economic cycles, this has not been the case this time. The
market's leadership is concentrating in an increasingly narrow group of
large, blue chip companies--the New Nifty Fifty, as some have called
them. While these companies have grown their earnings nicely in recent
years, they now trade at valuations that are well in excess of small-
and mid-cap companies, even though many of the latter are expected to
grow their earnings significantly faster in the next few years. On a
relative basis, small- and mid-cap stocks are trading at historically
low levels. We believe the Mid-Cap Growth Fund is well positioned to
achieve attractive returns over the long run.
Respectfully submitted,
/s/ Brian W.H. Berghuis
Brian W.H. Berghuis
President and Chairman of the Investment Advisory Committee
July 17, 1998
4
<PAGE>
T. ROWE PRICE MID-CAP GROWTH FUND
- --------------------------------------------------------------------------------
- --------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/98
- --------------------------------------------------------------------------------
Warnaco Group 2.2%
................................................................................
Affiliated Computer Services 1.9
................................................................................
Galileo International 1.8
................................................................................
Capital One Financial 1.7
................................................................................
U.S. Foodservice 1.6
................................................................................
Royal Caribbean Cruises 1.6
................................................................................
Outdoor Systems 1.6
................................................................................
Biogen 1.6
................................................................................
Circuit City Stores 1.5
................................................................................
Premier Parks 1.4
................................................................................
Suiza Foods 1.3
................................................................................
Western Wireless 1.3
................................................................................
AutoZone 1.3
................................................................................
Camco International 1.3
................................................................................
Danaher 1.3
................................................................................
Interim Services 1.3
................................................................................
SunGard Data Systems 1.3
................................................................................
BE Aerospace 1.3
................................................................................
DST Systems 1.2
................................................................................
Corporate Express 1.2
................................................................................
Costco Companies 1.2
................................................................................
Covance 1.2
................................................................................
PartnerRe Holdings 1.2
................................................................................
Sterling Commerce 1.2
................................................................................
BJ's Wholesale Club 1.2
- --------------------------------------------------------------------------------
Total 35.7%
5
<PAGE>
T. ROWE PRICE MID-CAP GROWTH FUND
- --------------------------------------------------------------------------------
- ---------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended June 30, 1998
<TABLE>
<CAPTION>
Ten Best Contributors Ten Worst Contributors
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital One Financial 36(cent) Smith International -15(cent)
................................................. ....................................................
Galileo International 24 Gymboree 13
................................................. ....................................................
Outdoor Systems 23 Security Dynamics Technologies 11
................................................. ....................................................
Affiliated Computer Services 21 Dura Pharmaceuticals* 9
................................................. ....................................................
Warnaco Group 21 Berg Electronics* 8
................................................. ....................................................
Royal Caribbean Cruises 20 AMRESCO* 7
................................................. ....................................................
360 Communications ** 20 Cendant 7
................................................. ....................................................
Fairfax Financial 17 Gilead Sciences 6
................................................. ....................................................
Biogen 17 Security Capital Group 6
................................................. ....................................................
United States Surgical 13 Ikon Office Solutions** 6
................................................. ....................................................
Total 212(cent) Total -88(cent)
<CAPTION>
12 Months Ended June 30, 1998
Ten Best Contributors Ten Worst Contributors
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outdoor Systems * 39(cent) Smith International -12(cent)
................................................. ....................................................
Capital One Financial * 37 OEA ** 11
................................................. ....................................................
Royal Caribbean Cruises * 36 Security Dynamics Technologies 10
................................................. ....................................................
Galileo International * 27 TVX Gold 10
................................................. ....................................................
360 Communications ** 25 Vencor ** 9
................................................. ....................................................
Cox Communications 23 Gymboree 9
................................................. ....................................................
Costco Companies 23 Cambior 9
................................................. ....................................................
Kohl's 21 Dura Pharmaceuticals * 9
................................................. ....................................................
DST Systems 21 Berg Electronics * 8
................................................. ....................................................
ACE Limited 21 AMRESCO 7
................................................. ....................................................
Total 273(cent) Total -94(cent)
</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
- --------------------------------------------------------------------------------
As of 6/30/98
[LINE GRAPH APPEARS HERE]
S&P Mid Lipper Mid Cap
Cap Index Fund Index Mid-Cap Growth Fund
6/30/92 10000 10000 10000
6/93 12269 12304 13692
6/94 12262 12381 14810
6/95 15002 15505 18698
6/96 18241 19930 25139
6/97 22496 22315 29470
6/98 28604 27213 38282
- ------------------------------------
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
Since Inception
Periods Ended 6/30/98 1 Year 3 Years 5 Years Inception Date
- --------------------------------------------------------------------------------
Mid-Cap Growth Fund 29.90% 26.98% 22.83% 25.07% 6/30/92
- --------------------------------------------------------------------------------
Income 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
Ended Ended
6/30/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 28.60 $ 24.43 $ 20.13 $ 14.85 $ 15.18 $ 12.27
.............................................................................................
Investment activities
Net investment income (0.02) (0.03) (0.01) -- -* -*
Net realized and
unrealized gain (loss) 4.77 4.50 5.00 6.07 0.04 3.21
.............................................................................................
Total from
investment activities 4.75 4.47 4.99 6.07 0.04 3.21
.............................................................................................
Distributions
Net realized gain -- (0.30) (0.69) (0.79) (0.37) (0.30)
.............................................................................................
NET ASSET VALUE
End of period $ 33.35 $ 28.60 $ 24.43 $ 20.13 $ 14.85 $ 15.18
---------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Total return(.) 16.61% 18.33% 24.84% 40.95% 0.29%* 26.24%*
............................................................................................................................
Ratio of expenses to
average net assets 0.92%+ 0.95% 1.04% 1.25% 1.25%* 1.25%*
............................................................................................................................
Ratio of net investment
income to average
net assets (0.14)%+ (0.14)% (0.11)% (0.01)% 0.02%* (0.12)%*
............................................................................................................................
Portfolio turnover rate 22.0% 42.6% 38.1% 57.5% 48.7% 62.4%
............................................................................................................................
Net assets, end of period
(in millions) $ 2,738 $ 1,839 $ 1,021 $ 264 $ 101 $ 65
............................................................................................................................
</TABLE>
. Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
* Excludes expenses in excess of a 1.25% voluntary expense limitation in effect
through 12/31/95.
+ Annualized.
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
T. ROWE PRICE MID-CAP GROWTH FUND
- --------------------------------------------------------------------------------
Unaudited June 30, 1998
- ------------------------
Portfolio of Investments Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
COMMON STOCKS 91.3%
FINANCIAL 10.9%
Insurance 4.3%
ACE Limited 650,000 $ 25,350
..............................................................................
Fairfax Financial (CAD) * 79,000 30,815
..............................................................................
PartnerRe Holdings 625,000 31,875
..............................................................................
Protective Life 775,000 28,433
..............................................................................
116,473
...........
Financial Services 6.6%
AMRESCO * 850,000 24,703
..............................................................................
Capital One Financial 375,800 46,670
..............................................................................
FINOVA Group 550,000 31,144
..............................................................................
Franklin Resources 500,000 27,000
..............................................................................
Heller Financial * 135,000 4,050
..............................................................................
INMC Mortgage Holdings 950,000 21,612
..............................................................................
Waddell & Reed (Class A) 1,100,000 26,331
..............................................................................
181,510
...........
Total Financial 297,983
...........
HEALTH CARE 14.2%
Pharmaceuticals 3.5%
ALZA * 625,000 27,031
..............................................................................
Dura Pharmaceuticals * 1,100,000 24,647
..............................................................................
R.P. Scherer * 225,000 19,941
..............................................................................
Teva Pharmaceutical ADR 700,000 24,631
..............................................................................
96,250
...........
Biotechnology 4.4%
Agouron Pharmaceuticals * 300,000 9,122
..............................................................................
Biogen * 900,000 44,100
..............................................................................
Centocor * 700,000 25,397
..............................................................................
Gilead Sciences * 780,000 25,009
..............................................................................
MedImmune * 262,300 16,426
..............................................................................
120,054
...........
Medical Instruments and Devices 1.9%
Sybron International * 1,125,000 28,406
..............................................................................
United States Surgical 500,000 22,813
..............................................................................
51,219
...........
9
<PAGE>
T. ROWE PRICE MID-CAP GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Health Care Services 4.4%
Covance * 1,425,000 $ 32,062
...........................................................................
Omnicare 775,000 29,547
...........................................................................
Quorum Health Group * 1,100,000 29,116
...........................................................................
Total Renal Care Holdings * 875,000 30,187
...........................................................................
120,912
...........
Total Health Care 388,435
...........
CONSUMER 17.2%
Soft Goods Retailers 1.4%
Gymboree * 725,000 10,988
...........................................................................
Kohl's * 500,000 25,938
...........................................................................
36,926
...........
Hard Goods Retailers 7.9%
AutoZone * 1,100,000 35,131
...........................................................................
BJ's Wholesale Club * 775,000 31,484
...........................................................................
Circuit City Stores 850,000 39,844
...........................................................................
Costco Companies * 510,000 32,178
...........................................................................
Fred Meyer * 650,000 27,625
...........................................................................
General Nutrition * 825,000 25,730
...........................................................................
Shopko Stores * 750,000 25,500
...........................................................................
217,492
...........
Consumer Non-Durables 2.2%
Warnaco Group (Class A) 1,450,000 61,534
...........................................................................
61,534
...........
Restaurants 1.1%
Outback Steakhouse * 750,000 29,227
...........................................................................
29,227
...........
Food and Beverages 1.3%
Suiza Foods * 600,000 35,813
...........................................................................
35,813
...........
Entertainment 3.0%
Premier Parks * 575,000 38,309
...........................................................................
Royal Caribbean Cruises 560,000 44,520
...........................................................................
82,829
...........
Consumer Services 0.3%
Cendant * 375,000 7,828
...........................................................................
7,828
...........
Total Consumer 471,649
...........
10
<PAGE>
T. ROWE PRICE MID-CAP GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
TECHNOLOGY 10.8%
Computer Software 3.6%
BMC Software * 450,000 $ 23,386
................................................................................
The Learning Company * 296,400 8,781
................................................................................
Network Associates * 525,000 25,118
................................................................................
Security Dynamics Technologies * 650,000 11,720
................................................................................
Synopsys * 675,000 30,902
................................................................................
99,907
..........
Semiconductors & Components 4.8%
Analog Devices * 1,050,000 25,791
................................................................................
Berg Electronics * 1,150,000 22,497
................................................................................
Maxim Integrated Products * 800,000 25,375
................................................................................
Microchip Technology * 650,000 17,022
................................................................................
PMC-Sierra * 425,000 19,895
................................................................................
Xilinx * 600,000 20,419
................................................................................
130,999
..........
Networking and Telecom Equipment 0.5%
Anixter International * 675,000 12,867
................................................................................
12,867
..........
E-Commerce 1.9%
Checkfree Holdings * 700,000 20,628
................................................................................
Sterling Commerce * 650,000 31,525
................................................................................
52,153
..........
Total Technology 295,926
..........
BUSINESS SERVICES 28.7%
Telecom Services 5.7%
Comcast (Class A Special) 700,000 28,416
................................................................................
Cox Communications (Class A) * 550,000 26,641
................................................................................
Omnipoint * 1,250,000 28,711
................................................................................
Paging Network * 2,150,000 30,033
................................................................................
Vanguard Cellular (Class A) * 307,600 5,806
................................................................................
Western Wireless (Class A) * 1,775,000 35,333
................................................................................
154,940
..........
Computer Services 7.4%
Acxiom * 253,500 6,345
................................................................................
Affiliated Computer Services (Class A) * 1,325,000 51,013
................................................................................
11
<PAGE>
T. ROWE PRICE MID-CAP GROWTH FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
DST Systems * 600,000 $ 33,600
................................................................................
Galileo International 1,075,000 48,442
................................................................................
National Data 675,000 29,531
................................................................................
SunGard Data Systems * 900,000 34,538
................................................................................
203,469
..........
Distribution 5.1%
Corporate Express * 2,565,000 32,463
................................................................................
Henry Schein * 650,000 29,859
................................................................................
MSC (Class A) * 926,800 26,414
................................................................................
Richfood Holdings 372,500 7,706
................................................................................
U.S. Foodservice * 1,270,000 44,530
................................................................................
140,972
..........
Media and Advertising 4.3%
ADVO * 186,400 5,254
................................................................................
Catalina Marketing * 400,000 20,775
................................................................................
Jacor Communications * 440,000 25,987
................................................................................
Outdoor Systems * 1,575,200 44,106
................................................................................
Univision Communications (Class A) * 585,000 21,791
................................................................................
117,913
..........
Real Estate Services 1.0%
Security Capital Group (Class B) * 1,050,000 27,956
................................................................................
27,956
..........
Environmental 0.9%
USA Waste Services * 473,500 23,379
................................................................................
23,379
..........
Miscellaneous Business Services 4.3%
AccuStaff * 85,600 2,675
................................................................................
Interim Services * 1,082,800 34,785
................................................................................
NOVA * 733,700 26,230
................................................................................
Renaissance Worldwide * 1,100,000 23,959
................................................................................
Romac International * 446,000 13,603
................................................................................
Sodexho Marriott * 546,700 15,854
................................................................................
117,106
..........
Total Business Services 785,735
..........
ENERGY 3.4%
Energy Services 2.6%
Camco International 450,000 35,044
................................................................................
12
<PAGE>
T. ROWE PRICE MID-CAP GROWTH FUND
- --------------------------------------------------------------------------------
Shares/par Value
- --------------------------------------------------------------------------------
In thousands
Cooper Cameron * 300,000 $ 15,300
................................................................................
Smith International * 600,000 20,887
................................................................................
71,231
..........
Exploration and Production 0.8%
Ocean Energy * 1,125,000 22,008
................................................................................
22,008
..........
Total Energy 93,239
..........
INDUSTRIAL 4.3%
Defense and Aerospace 1.3%
BE Aerospace * + 1,175,000 34,442
................................................................................
34,442
..........
Specialty Chemicals 0.8%
Great Lakes Chemical 550,000 21,691
................................................................................
21,691
..........
Machinery 2.2%
Danaher 950,000 34,853
................................................................................
Teleflex 700,000 26,600
................................................................................
61,453
..........
Total Industrial 117,586
..........
BASIC MATERIALS 1.1%
Mining 1.1%
Battle Mountain Gold 2,650,000 15,734
................................................................................
Cambior 1,100,000 6,463
................................................................................
TVX Gold * 2,700,000 8,269
................................................................................
Total Basic Materials 30,466
..........
Miscellaneous Common Stocks 0.7% 18,800
..........
Total Common Stocks (Cost $1,920,791) 2,499,819
..........
Short-Term Investments 8.4%
Money Market Funds 8.4%
Government Reserve Investment Fund, 5.48% # + 231,010,809 231,011
................................................................................
Total Short-Term Investments (Cost $231,011) 231,011
..........
13
<PAGE>
T. ROWE PRICE MID-CAP GROWTH FUND
- --------------------------------------------------------------------------------
Value
- --------------------------------------------------------------------------------
In thousands
Total Investments in Securities
99.7% of Net Assets (Cost $2,151,802) $ 2,730,830
Other Assets Less Liabilities 6,933
...........
NET ASSETS $ 2,737,763
-----------
# Seven-day yield
+ Affiliated company
* Non-income producing
ADR American Depository Receipt
CAD Canadian dollar
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1998
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value
Affiliated companies (cost $261,997) $ 265,453
Other companies (cost $1,889,805) 2,465,377
.............
Total investments in securities 2,730,830
Other assets 29,005
.............
Total assets 2,759,835
.............
Liabilities
Total liabilities 22,072
.............
NET ASSETS $ 2,737,763
-------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (1,580)
Accumulated net realized gain/loss - net of distributions 127,965
Net unrealized gain (loss) 579,028
Paid-in-capital applicable to 82,096,365 shares of
$0.01 par value capital stock outstanding;
1,000,000,000 shares authorized 2,032,350
.............
NET ASSETS $ 2,737,763
-------------
NET ASSET VALUE PER SHARE $ 33.35
-------------
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
T. ROWE PRICE MID-CAP GROWTH FUND
- --------------------------------------------------------------------------------
Unaudited
- -------------------------
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/98
Investment Income
Income
Interest $ 5,906
Dividend 2,950
...........
Total income 8,856
...........
Expenses
Investment management 7,606
Shareholder servicing 2,381
Registration 222
Prospectus and shareholder reports 130
Custody and accounting 66
Legal and audit 7
Directors 6
Miscellaneous 18
...........
Total expenses 10,436
...........
Net investment income (1,580)
...........
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 104,901
...........
Foreign currency transactions 4
...........
Net realized gain (loss) 104,905
...........
Change in net unrealized gain or loss on securities 219,647
...........
Net realized and unrealized gain (loss) 324,552
...........
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 322,972
-----------
The accompanying notes are an integral part of these financial statements.
16
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T. ROWE PRICE MID-CAP GROWTH FUND
- --------------------------------------------------------------------------------
Unaudited
- -----------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
6/30/98 12/31/97
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ (1,580) $ (1,974)
Net realized gain (loss) 104,905 35,684
Change in net unrealized gain or loss 219,647 210,970
..................................
Increase (decrease) in net assets from operations 322,972 244,680
..................................
Distributions to shareholders
Net realized gain -- (19,049)
..................................
Capital share transactions *
Shares sold 907,193 1,031,810
Distributions reinvested -- 18,314
Shares redeemed (331,054) (458,141)
..................................
Increase (decrease) in net assets from capital
share transactions 576,139 591,983
..................................
Net Assets
Increase (decrease) during period 899,111 817,614
Beginning of period 1,838,652 1,021,038
..................................
End of period $ 2,737,763 $ 1,838,652
----------------------------------
*Share information
Shares sold 28,433 39,733
Distributions reinvested -- 657
Shares redeemed (10,623) (17,896)
..................................
Increase (decrease) in shares outstanding 17,810 22,494
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
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T. ROWE PRICE MID-CAP GROWTH FUND
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Unaudited June 30, 1998
- ------------------------------
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.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
Valuation Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price on the day the
valuations are made. A security which is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Listed securities not traded on a
particular day and securities regularly traded in the over-the-counter
market are valued at the mean of the latest bid and asked prices. Other
equity securities are valued at a price within the limits of the latest
bid and asked prices deemed by the Board of Directors, or by persons
delegated by the Board, best to reflect fair value.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of
such currencies against U.S. dollars quoted by a major bank.
Premiums and Discounts Premiums and discounts on debt securities are
amortized for both financial reporting and tax purposes.
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.
Affiliated Companies As defined by the Investment Company Act of 1940, an
affiliated company is one in which the fund owns at least 5% of the
outstanding voting securities.
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
18
<PAGE>
T. ROWE PRICE MID-CAP GROWTH FUND
- --------------------------------------------------------------------------------
of securities and income and expenses are translated into U.S. dollars at
the prevailing exchange rate on the dates of such transactions. The effect
of changes in foreign exchange rates on realized and unrealized security
gains and losses is reflected as a component of such gains and losses.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and
losses are reported on the identified cost basis. Dividend income and
distributions to shareholders are recorded by the fund on the ex-dividend
date. Income and capital gain distributions are determined in accordance
with federal income tax regulations and may differ from those determined
in accordance with generally accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $939,826,000 and $459,747,000, respectively, for
the six months ended June 30, 1998.
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, 1998, the aggregate cost of investments for federal income tax
and financial reporting purposes was $2,151,802,000, and net unrealized
gain aggregated $579,028,000, of which $662,220,000 related to appreciated
investments and $83,192,000 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 $1,424,000 was payable at June 30, 1998. 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-
19
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T. ROWE PRICE MID-CAP GROWTH FUND
- --------------------------------------------------------------------------------
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, 1998, and for the six months then ended, the
effective annual group fee rate was 0.32%. The fund pays a pro-rata share
of the group fee based on the ratio of its net assets to those of the
group.
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund
receives certain other services. The manager computes the daily share
price and maintains the financial records of the fund. T. Rowe Price
Services, Inc., is the fund's transfer and dividend disbursing agent and
provides shareholder and administrative services to the fund. T. Rowe
Price Retirement Plan Services, Inc., provides subaccounting and
recordkeeping services for certain retirement accounts invested in the
fund. The fund incurred expenses pursuant to these related party
agreements totaling approximately $1,909,000 for the six months ended June
30, 1998, of which $355,000 was payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve
Funds are offered as cash management options only to mutual funds and
other accounts managed by T. Rowe Price and its affiliates and are not
available to the public. The Reserve Funds pay no investment management
fees. Distributions from the Reserve Funds to the fund for the six months
ended June 30, 1998, totaled $5,901,000 and are reflected as interest
income in the accompanying Statement of Operations.
20
<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 the T.
Rowe Price Web site on the Internet. Address: www.troweprice.com
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 all your accounts with T. Rowe
Price.
Shareholder Reports Fund managers' reviews of their strategies
and results.
T. Rowe Price Report Quarterly investment newsletter discussing
markets and financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund
results.
Insights Educational reports on investment strategies and
financial markets.
Investment Guides Asset Mix Worksheet, College Planning Kit,
Diversifying Overseas: A Guide to International Investing,
Personal Strategy Planner, Retirees Financial Guide, and
Retirement Planning Kit.
*A division of T. Rowe Price Investment Services, Inc. Member
NASD/SIPC.
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.
