Annual Report
For yield, price, last transaction,
and current balance, 24 hours,
7 days a week, call:
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T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Mid-Cap Growth
Fund.
T. ROWE PRICE
______________
MID-CAP GROWTH
FUND
DECEMBER 31, 1994
Fellow Shareholders
This was not a vintage year in the financial markets. Even though corporate
earnings gains were the best in several years, the stock market was held
hostage to rising interest rates. After meandering in a relatively narrow
trading range for much of 1994, most stock indices, including the unmanaged
Standard & Poor's MidCap Index and the Nasdaq Composite, finished the year
with small losses. Large-cap stocks, represented by the unmanaged Standard &
Poor's 500 Stock Index, eked out a positive total return only because
dividends more than offset price declines.
Your Fund registered a fractional loss for the quarter and a very small
gain for the year. Both returns were better than those of the S&P MidCap and
Nasdaq Composite indices, as shown below.
Performance Comparison
Periods Ended 12/31/94
3 Months 12 Months
________________________
Mid-Cap Growth Fund - 0.6% 0.3%
S&P MidCap Index - 2.6 - 3.6
S&P 500 Index 0.0 1.3
Nasdaq Composite* - 1.6 - 3.2
*Principal only
Capital Gain Distributions
On December 27, the Fund's Board of Directors declared a $0.22 per-share
long-term capital gain and a $0.15 short-term gain payable to shareholders of
record on that date. You should have received your statement or check
reflecting these distributions and also Form 1099-DIV reporting them for tax
purposes.
Market Environment
After three good years for the stock market, 1994 was a dull affair. The
pervasive influence on the market was the Federal Reserve's determination to
forestall any resurgence in the rate of inflation by raising interest rates.
Economic growth exceeded most expectations and seemed to accelerate as the
year progressed, leading to shortages and significant price increases at the
wholesale level in some commodities. Neverthe-less, inflation at the consumer
level remained low as many producers were unable to pass through higher costs.
Rising interest rates took their toll as the year wore on, but more by
exposing excesses in the financial realm than by slowing the economy. In the
spring, a number of hedge funds that had borrowed at low short-term rates to
invest in higher-yielding long-term bonds experienced significant losses. Not
until the fall would we discover that the same phenomenon had affected several
municipalities that had also engaged in speculative practices, most notably
Orange County, California, which was forced to file for bankruptcy. Higher
U.S. interest rates precipi-tated a currency crisis in Mexico at year's end, a
disappointing conclusion to the first year of the North American Free Trade
Agreement.
On the political front, President Clinton's inability to exert strong
leadership in either domestic or foreign policy was disquieting to the stock
market. However, the election of the first Republican majority in both houses
of Congress in 40 years also failed to cheer investors.
Perhaps 1994 seemed worse than it was. Indeed, the overall volatility of
the stock market was, like 1992 and 1993, abnormally low by historical
standards. Though the year began with a brisk rally in January, this was
undermined when the Federal Reserve reversed a long period of ease on February
4 by initiating the first of six hikes in the federal funds target rate.
Higher short- and long-term rates dampened investors' enthusiasm, and the
market experienced corrections in March and June. Spurred by optimism over
corporate earnings reports and a firming U.S. dollar, the market snapped back
in the third quarter, which proved to be the only decent quarter of the year.
The market limped to a mixed finish as investors began to assume an economic
slowdown in 1995.
Market leadership rotated from sector to sector throughout much of the
year. Cyclicals paced the market in the first half, only to see their gains
erased in the last half. Health care stocks, wounded in 1993 and early 1994,
rallied upon the demise of the President's health plan at midyear. The only
sector to shine throughout 1994, as in 1992 and 1993, was technology. Interest
rate-sensitive groups such as financials, utilities, and gold stocks were
among the year's worst performers.
Portfolio Review
The market rewarded companies able to increase their earnings rapidly in 1994,
regardless of industry sector. The Fund's top performer for the year was Smith
International, an energy services company that made a very profitable
acquisition. Both Autodesk, a developer of design software in the midst of a
strong new product cycle, and Danaher, a manufacturer of hand tools and
process controls, benefited from earnings well above the market's expectations
and were among the Fund's top contributors. Among the worst contributors in
1994 were Addington Resources, a diversified mining and environmental company,
and Duff & Phelps, an investment manager; both companies reported
disappointing earnings.
For the fourth quarter, the two best contributions to the Fund's
performance resulted from stock tenders. Intuit, a software company
specializing in personal finance, received an attractive buyout offer from
Microsoft, and Chiron, one of our favorite biotechnology companies, received
an offer for about a third of its publicly held stock at a significant premium
to the stock's market price. The worst contributor in the quarter was
Oceaneering International, an energy services company that was hurt by weak
pricing for natural gas.
Portfolio Strategy
During the year, we reduced our financial services holdings and increased
those in the health care and business services sectors, as shown in the table.
Industry Diversification
12/31/93 12/31/94
________ ________
Financial 15%7%
Health Care 4 11
Consumer 17 17
Technology 8 7
Business Services 21 24
Energy 6 6
Industrial 15 13
Basic Materials 6 6
Reserves 8 9
In view of the trend toward rising interest rates, we reduced the Fund's
exposure to financial stocks early in the first half. However, given the
sector's poor performance in 1994 and signs that long-term interest rates may
be stabilizing, our interest in the group is rising, and we may add new
positions in the months ahead. We added to our holdings in health care at
mid-year; much of the increase was in biotechnology, where we believed that
market sentiment had turned excessively bearish. The business services
category encompasses a wide variety of companies, and we continued to add to
this area, particularly in the computer processing group.
Our exposure to technology remains low; while we view the sector as
attractive in the long run, we believe that investors have bid up many of
these stocks to levels that ignore the possibility of cyclical setbacks in
their earnings. Though we have reduced our weighting in the industrial area,
we think this is a far more dynamic sector of the economy than many give it
credit for. In fact, we expect investors will be surprised to find that a
significant number of true growth companies emerge from this area over the
next several years.
As the earnings of many growth companies rose smartly in 1994 while
their stock prices languished, their P/E ratios declined. We took this
opportunity to increase the portfolio's average projected earnings growth rate
to about 20%. Nevertheless, we are always looking for depressed valuations
where current momentum may not be obvious. In addition to the financial area
mentioned earlier, we are considering increasing our positions in energy and
gold. With respect to gold, we expect the rapid growth taking place in many
emerging economies that lack stable currencies will strengthen demand,
creating an upward bias for gold prices over the next several years. The
recent dramatic devaluation of the Mexican peso reinforces our conviction.
Outlook
The economy appears to be expanding at a healthy clip, and while we would
expect the rate of growth to moderate, we do not anticipate a recession this
year. We worry about rising inflation, but believe we are witnessing a normal
uptrend for this point in an economic cycle. We do not expect longer-term
interest rates to rise significantly from current levels; certainly, it would
be difficult for the stock market to sustain a rally if they did.
Most of early 1994's speculative excesses in the stock market have
subsided. Although stock valuations are not compelling by historical
standards, growth stocks appear attractive relative to the market. Your Fund's
portfolio exhibits growth characteristics significantly above the market as a
whole, yet its price/earnings ratio is only modestly higher. While 1994 was a
difficult year for stock investors generally, the Mid-Cap Growth Fund has
weathered the storm well, and we continue to believe it is positioned to
achieve attractive returns over the next several years.
Respectfully submitted,
Brian W. H. Berghuis
President and Chairman of the
Investment Advisory Committee
January 20, 1995
Twenty-Five Largest Holdings
December 31, 1994
Percent of
Company Net Assets
________________________________ __________
Alco Standard 3.1%
CUC International 2.9
Sbarro 2.5
Sanifill 2.4
Catalina Marketing 2.4
SunGard Data Systems 2.3
Chiron 2.2
First Financial Management 2.1
Pittston Services 2.1
Sealed Air 2.1
Albany International 2.0
TriMas 2.0
Mercantile Bancorporation 1.9
Revco 1.9
Integra Financial 1.8
ADVO 1.8
Freeport-McMoRan Copper & Gold 1.8
Minerals Technologies 1.7
Autodesk 1.7
Biogen 1.7
Hubbell 1.6
Danaher 1.6
Sybron International 1.5
Placer Dome 1.5
Halliburton 1.5
__________________________________________________________________________
Total 50.1%
Contributions to the Change in Net Asset Value Per Share
T. Rowe Price Mid-Cap Growth Fund
Three Months Ended December 31, 1994
__________________________________________________________________________
TEN BEST CONTRIBUTORS
Intuit** 7(cents)
Chiron 6
OfficeMax* 6
Autodesk 6
Danaher 4
Sanifill 4
Sealed Air 3
Revco 3
Xilinx 3
SunGard Data Systems 3
__________________________________________________________________________
Total 45(cents)
TEN WORST CONTRIBUTORS
Oceaneering International - 6(cents)
Addington Resources 5
Smith International 5
Duff & Phelps 5
Biogen 5
SEI 5
Mercantile Bancorporation 5
Brinker International 4
Placer Dome 4
Freeport-McMoRan Copper & Gold 3
__________________________________________________________________________
Total -47(cents)
*Position added
**Position eliminated
Twelve Months Ended December 31, 1994
TEN BEST CONTRIBUTORS
Smith International 17(cents)
Autodesk 11
Danaher 9
Catalina Marketing 8
Revco* 8
Chiron 8
Intuit** 7
Boston Scientific** 6
Alco Standard 6
OfficeMax* 6
__________________________________________________________________________
Total 86(cents)
TEN WORST CONTRIBUTORS
Addington Resources -14(cents)
SEI 13
Duff & Phelps 13
Autotote 8
Phillips-Van Heusen** 8
Hollywood Park** 7
CKE Restaurants** 7
Oceaneering International 6
Sigma Aldrich** 6
TriMas 5
__________________________________________________________________________
Total - 87(cents)
Investment Record
T. Rowe Price Mid-Cap Growth Fund
The table below shows the investment record of one share of the T. Rowe Price
Mid-Cap Growth Fund, purchased at the initial offering price of $10.00, for
the period 6/30/92 through 12/31/94. Over this time stock prices in general
have risen. The results shown should not be considered a representation of the
dividend income or capital gain or loss which may be realized from an
investment made in the Fund today.
<TABLE>
Per- Share Data
<CAPTION>
With Capital Gains and Income Dividends
Taken in CashReinvested in Additional Shares Total Return
________________________________ _____________________________________On Investment
Periods Net Capital Capital % Change
Ended Asset Gain Income Gain Income Value of _________________
12/31 ValueDistributions1Dividend Distributions DividendInvestment Fund S&P 500
_______ ______ ______________________________________________________ ______ _______
<S> <C> <C> <C> <C> <C> <C> <C> <C>
19922 $12.27 $0.18 $0.00 $0.18 $0.00 $12.45 24.5% 8.3%
1993 15.18 0.30 0.00 0.30 0.00 15.72 26.2 30.3
1994 14.85 0.37 0.00 0.38 0.00 15.77 0.3 1.3
Total $0.85 $0.00 $0.86 $0.00
<FN>
1 Includes short-term capital gains of $0.18 in 1992, $0.30 in 1993, and $0.15 in 1994, which are
taxable to shareholders at ordinary income rates.
2 From inception 6/30/92 to 12/31/92.
</FN>
</TABLE>
Chart 1 - SEC Chart
Fiscal-Year Performance
Periods ended December 31, 1994
Since Inception
1 Year On 6/30/92*
________ ____________
0.29% 19.95%
*Average Annual Compound Total Return
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
Statement of Net Assets (Value in thousands)
T. Rowe Price Mid-Cap Growth Fund / December 31, 1994
Common Stocks - 91.2%
FINANCIAL - 7.3%
Value
______
BANK & TRUST - 4.5%
45,000 shs. Integra Financial. . . . . . . $ 1,851
4,700 KeyCorp. . . . . . . . . . . . 118
35,000 Marshall & Ilsley. . . . . . . 665
62,000 Mercantile Bancorporation. . . 1,937
4,571
INSURANCE - 0.9%
35,000 Selective Insurance. . . . . . 884
FINANCIAL SERVICES - 1.9%
19,000 Charles Schwab . . . . . . . . 663
105,000 Duff & Phelps. . . . . . . . . 905
33,333 Duff & Phelps Credit Rating. . 329
1,897
Total Financial 7,352
HEALTH CARE - 10.6%
BIOTECHNOLOGY - 4.7%
41,000 * Biogen . . . . . . . . . . . . 1,712
27,000 * Chiron . . . . . . . . . . . . 2,170
60,000 * Immunex. . . . . . . . . . . . 892
4,774
MEDICAL INSTRUMENTS & DEVICES - 4.1%
70,000 * Haemonetics. . . . . . . . . . 1,208
35,000 St. Jude Medical . . . . . . . 1,391
45,000 * Sybron International . . . . . 1,552
4,151
HEALTH CARE SERVICES - 1.8%
15,000 Cardinal Health. . . . . . . . 696
35,000 * Foundation Health. . . . . . . 1,085
1,781
Total Health Care 10,706
CONSUMER - 17.1%
SOFT GOOD RETAILERS - 0.8%
20,000 * Kohl's . . . . . . . . . . . . 795
HARD GOOD RETAILERS - 5.8%
40,000 * General Nutrition Companies. . 1,160
60,000 * Office Depot . . . . . . . . . 1,440
50,000 * OfficeMax. . . . . . . . . . . 1,325
80,000 * Revco. . . . . . . . . . . . . 1,890
5,815
CONSUMER NON-DURABLES - 2.2%
40,000 shs. Brunswick. . . . . . . . . . . $ 755
55,000 Sunbeam-Oster. . . . . . . . . 1,416
2,171
RESTAURANTS - 3.4%
50,000 * Brinker. . . . . . . . . . . . 906
97,500 Sbarro . . . . . . . . . . . . 2,535
3,441
ENTERTAINMENT - 1.4%
45,000 * Promus Companies . . . . . . . 1,395
CONSUMER SERVICES - 3.5%
25,000 * Autotote (Class A) . . . . . . 285
86,000 * CUC International. . . . . . . 2,881
40,000 * Home Shopping Network. . . . . 400
3,566
Total Consumer 17,183
TECHNOLOGY - 7.0%
COMPUTER HARDWARE - 0.9%
30,000 * Silicon Graphics . . . . . . . 926
COMPUTER SOFTWARE - 3.0%
44,000 Autodesk . . . . . . . . . . . 1,744
14,000 * Sybase . . . . . . . . . . . . 728
12,000 * Synopsys . . . . . . . . . . . 525
2,997
SEMICONDUCTORS - 3.1%
10,000 Linear Technology. . . . . . . 495
20,000 * Maxim Integrated Products. . . 700
30,000 * Silicon Valley Group . . . . . 619
22,000 * Xilinx . . . . . . . . . . . . 1,303
3,117
Total Technology 7,040
BUSINESS SERVICES - 23.6%
TELECOM SERVICES - 0.9%
30,000 * ALC Communications . . . . . . 934
COMPUTER SERVICES - 6.5%
40,000 * Ceridian . . . . . . . . . . . 1,075
35,000 First Financial Management . . 2,157
56,300 SEI . 971
60,000 * SunGard Data Systems . . . . . 2,310
6,513
DISTRIBUTION - 3.1%
50,000 shs. Alco Standard. . . . . . . . . $ 3,137
MEDIA & ADVERTISING - 4.2%
105,000 ADVO . . . . . . . . . . . . . 1,811
42,600 * Catalina Marketing . . . . . . 2,370
4,181
ENVIRONMENTAL - 3.3%
100,000 * Addington Resources. . . . . . 975
95,000 * Sanifill . . . . . . . . . . . 2,375
3,350
MISCELLANEOUS BUSINESS SERVICES - 5.6%
25,000 * Corporate Express. . . . . . . 488
35,000 * Hospitality Franchise. . . . . 927
80,000 Pittston Services. . . . . . . 2,120
57,000 * Sealed Air . . . . . . . . . . 2,066
5,601
Total Business Services . . . . 23,716
ENERGY - 6.1%
ENERGY SERVICES - 6.1%
50,000 Camco International. . . . . . 944
46,500 * Enterra. . . . . . . . . . . . 883
45,000 Halliburton. . . . . . . . . . 1,491
135,000 * Oceaneering International. . . 1,384
115,000 * Smith International. . . . . . 1,437
Total Energy 6,139
INDUSTRIAL - 13.4%
PAPER & FOREST PRODUCTS - 2.0%
105,000 Albany International (Class A) 2,021
SPECIALTY CHEMICALS - 3.9%
25,000 A. Schulman. . . . . . . . . . 688
25,000 Great Lakes Chemical . . . . . 1,425
60,000 Minerals Technologies. . . . . 1,755
3,868
MACHINERY - 7.5%
30,000 Danaher. . . . . . . . . . . . 1,568
40,000 Greenfield Industries. . . . . 960
30,000 Hubbell (Class B). . . . . . . 1,597
40,000 Teleflex . . . . . . . . . . . 1,420
100,000 TriMas . . . . . . . . . . . . 2,000
7,545
Total Industrial 13,434
BASIC MATERIALS - 6.0%
MINING - 6.0%
85,000 shs. Freeport-McMoRan Copper
& Gold (Class A). . . . . . $ 1,806
55,000 Pittston Minerals. . . . . . . 1,403
70,000 Placer Dome. . . . . . . . . . 1,522
134,000 *## TVX Gold . . . . . . . . . . . 905
66,000 * TVX Gold . . . . . . . . . . . 445
Total Basic Materials 6,081
Miscellaneous Common Stocks - 0.1% 45
Total Common Stocks (Cost $83,142) 91,696
Short-Term Investments - 8.9%
CERTIFICATES OF DEPOSIT - 1.0%
$1,000,000 Societe Generale, 5.80%,
3/1/95. . . . . . . . . . . 1,000
COMMERCIAL PAPER - 6.9%
1,000,000 Compagnie Bancaire, 6.10%,
2/22/95 . . . . . . . . . . 986
1,000,000 Dover, 4(2), 5.90%, 1/24/95. . 995
1,000,000 Ford Credit Europe, 5.78%,
1/30/95 . . . . . . . . . . 990
1,000,000 Preferred Receivables Funding,
6.00%, 2/2/95 . . . . . . . 989
517,000 President & Fellows Harvard
College, 6.00%, 1/3/95. . . 517
1,495,000 UBS Finance (Delaware), 6.00%,
1/3/95. . . . . . . . . . . 1,494
1,000,000 U.S. West Capital Funding, 4(2),
6.05%, 1/12/95. . . . . . . 995
6,966
MEDIUM-TERM NOTES - 1.0%
1,000,000 Morgan Stanley Group, VR,
6.475%, 3/15/95 . . . . . . 1,000
Total Short-Term Investments (Cost $8,966) 8,966
Total Investments in Securities - 100.1%
(Cost $92,108) 100,662
Other Assets Less Liabilities. . . . . . . . . . . (139)
T. Rowe Price Mid-Cap Growth Fund / Statement of Net Assets
Net Assets Consisting of:
Accumulated net investment income -
net of distributions . $29
Accumulated realized gains/losses -
net of distributions . 934
Net unrealized gain . . . . . . . . . . . . . . 8,554
Paid-in-capital applicable to
6,767,991 of $0.01 par value
capital stock outstanding;
1,000,000,000 shares authorized. . . . . . . . . 91,006
________
NET ASSETS . . . . . . . . . . . . . . . . . . . . $ 100,523
_________
_________
NET ASSET VALUE PER SHARE. . . . . . . . . . . . . $14.85
_______
_______
* Non-income producing
## Securities contain some restrictions as to public resale - total of
such securities at year end amounts to 0.90% of net assets.
4(2) Commercial Paper sold within terms of a private placement
memorandum, exempt from registration under section 4.2 of the
Securities Act of 1933, as amended, and may be sold only to
dealers in that program or other "accredited investors."
VR Variable Rate
Statement of Operations
T. Rowe Price Mid-Cap Growth Fund / Year Ended December 31, 1994
(Amounts in thousands)
INVESTMENT INCOME
Income
Dividends. . . . . . . . . . . . . . . . $ 733
Interest . . . . . . . . . . . . . . . . 387
_________
Total income . . . . . . . . . . . . . . 1,120
_________
Expenses
Investment management. . . . . . . . . . 545
Shareholder servicing. . . . . . . . . . 294
Custody and accounting . . . . . . . . . 100
Registrations. . . . . . . . . . . . . . 55
Prospectus and shareholder reports . . . 36
Legal and auditing . . . . . . . . . . . 30
Proxy and annual meeting . . . . . . . . 13
Directors. . . . . . . . . . . . . . . . 10
Miscellaneous. . . . . . . . . . . . . . 18
_________
Total expenses . . . . . . . . . . . . . 1,101
_________
Net investment income. . . . . . . . . . . 19
_________
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on securities. . . . . . 2,548
Change in net unrealized gain
or loss on securities. . . . . . . . . . (2,098)
_________
Net realized and unrealized gain . . . . . 450
_________
INCREASE IN NET ASSETS FROM OPERATIONS . . $ 469
_________
_________
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Mid-Cap Growth Fund
Year Ended December 31,
_______________________
1994 1993
_________ _________
(Amounts in thousands)
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income (loss) . . . . . $ 19 $ (52)
Net realized gain . . . . . . . . . . 2,548 2,072
Change in net unrealized gain or loss. (2,098) 8,335
_________ _________
Increase in net assets from operations 469 10,355
_________ _________
Distributions to shareholders
Net realized gain. . . . . . . . . . . (2,427) (1,224)
_________ _________
Capital share transactions1
Shares sold. . . . . . . . . . . . . . 67,495 44,666
Distributions reinvested . . . . . . . 2,305 1,178
Shares redeemed. . . . . . . . . . . . (32,745) (17,159)
_________ _________
Increase in net assets from
capital share transactions . . . . . . 37,055 28,685
_________ _________
Net equalization . . . . . . . . . . . . - 4
_________ _________
Increase in net assets . . . . . . . . . 35,097 37,820
NET ASSETS
Beginning of year . . . . . . . . . . . 65,426 27,606
_________ _________
End of year . . . . . . . . . . . . . . $100,523 $65,426
_________ _________
_________ _________
1Capital share transactions (number of shares)
Shares sold. . . . . . . . . . . . . . 4,500 3,262
Distributions reinvested . . . . . . . 157 80
Shares redeemed. . . . . . . . . . . . (2,198) (1,284)
_________ _________
Increase in capital shares outstanding 2,459 2,058
_________ _________
_________ _________
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
Note 1 - Significant Accounting Policies
T. Rowe Price Mid-Cap Growth Fund (the Fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company.
A) Valuation - Equity securities listed or regularly traded on a securities
exchange (including Nasdaq) are valued at the last quoted sales price on the
day the valuations are made. A security which is listed or traded on more than
one exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price
within the limits of the latest bid and asked prices deemed by the Board of
Directors, or by persons delegated by the Board, best to reflect fair value.
Short-term debt securities are valued at their cost which, when combined with
accrued interest, approximates fair value.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
Fund, as authorized by the Board of Directors.
B) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on an identified cost basis. Dividend income and distributions to
shareholders are recorded by the Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income
tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. The Fund follows the practice of
equalization under which undistributed net investment income per share is
unaffected by Fund shares sold or redeemed.
Note 2 - Investment Transactions
Purchases and sales of portfolio securities, other than short-term and U.S.
Government securities, aggregated $70,358,000 and $38,964,000, respectively,
for the year ended December 31, 1994 .
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.
In order for the Fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, $10,000 of
undistributed net investment income was reclassified as a decrease to
paid-in-capital during the year ended December 31, 1994. The results of
operations and net assets were not affected by the reclassification.
At December 31, 1994, the aggregate cost of investments for federal
income tax and financial reporting purposes was $92,108,000 and net unrealized
gain aggregated $8,554,000, of which $12,806,000 related to appreciated
investments and $4,252,000 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 $58,000 was payable at December 31, 1994. 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 0.31% for assets in excess of $34
billion. At December 31, 1994 and for the year then ended, the effective
annual Group Fee rate was 0.34%. The Fund pays a pro rata share of the Group
Fee based on the ratio of its net assets to those of the Group.
Under the terms of the investment management agreement, the Manager is
required to bear any expenses through December 31, 1995, which would cause the
Fund's ratio of expenses to average net assets to exceed 1.25%. Thereafter
through December 31, 1997, the Fund is required to reimburse the Manager for
these expenses, provided that average net assets have grown or expenses have
declined sufficiently to allow reimbursement without causing the Fund's ratio
of expenses to average net assets to exceed 1.25%. Pursuant to this agreement,
$66,000 of management fees were not accrued by the Fund for the year ended
December 31, 1994. Additionally, $228,000 of unaccrued 1992-93 management fees
and expenses related to a previous agreement are subject to reimbursement
through December 31, 1995.
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.
(TRPS) 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 $293,000 for
the year ended December 31, 1994, of which $28,000 was payable at year-end.
Financial Highlights
T. Rowe Price Mid-Cap Growth Fund
For a share outstanding throughout each period
_____________________________________________
June 30, 1992
(Commencement
Year Ended December 31,of Operations) to
1994 1993 December 31, 1992
_____________________________________________
NET ASSET VALUE,
BEGINNING OF PERIOD. . . . $15.18 $12.27 $10.00
______ ______ ______
Investment Activities
Net investment income. . - * - * 0.01*
Net realized and
unrealized gain. . . . . 0.04 3.21 2.44
______ ______ ______
Total from Investment
Activities . . . . . . . 0.04 3.21 2.45
Distributions
Net realized gain. . . . (0.37) (0.30) (0.18)
______ ______ ______
NET ASSET VALUE,
END OF PERIOD. . . . . . .$14.85 $15.18 $12.27
______ ______ ______
______ ______ ______
RATIOS/SUPPLEMENTAL DATA
Total Return . . . . . . . 0.3%* 26.2%* 24.5%*
Ratio of Expenses to
Average Net Assets . . . 1.25%* 1.25%* 1.25%!*
Ratio of Net Investment Income
to Average Net Assets. . 0.02%* (0.12)%* 0.16%!*
Portfolio Turnover Rate. . 48.7% 62.4% 51.9%!
Net Assets, End of
Period
(in thousands) . . . . . $100,523 $65,426$27,606
!Annualized.
*Excludes expenses in excess of a 1.25% voluntary expense limitation in effect
through December 31, 1995.
Report of Independent Accountants
To the Board of Directors and Shareholders of
T. Rowe Price Mid-Cap Growth Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the selected per
share data and information (which appears under the heading "Financial
Highlights") present fairly, in all material respects, the financial position
of the T. Rowe Price Mid-Cap Growth Fund, Inc. at December 31, 1994, and the
results of its operations, the changes in its net assets and the selected per
share data and information for each of the fiscal periods presented, in
conformity with generally accepted accounting principles. These financial
statements and selected per share data and information (hereafter referred to
as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1994 by correspondence with
custodians and brokers and, where appropriate, the application of alternative
auditing procedures for unsettled security transactions, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
January 19, 1995
Shareholder Services
To help shareholders monitor their current investments and make decisions that
accu-rately reflect their financial goals, T. Rowe Price offers a wide variety
of information and services-at no extra cost.
Knowledgeable Service Representatives
By Phone-Shareholder Service Representatives are available from 8:00 a.m. to
10:00 p.m., Monday - Friday, and weekends from 9:00 a.m. to 5:00 p.m. ET. Call
1-800-225-5132 to speak directly with a representative who will be able to
assist you with your accounts.
In Person-Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. While there,
you can drop off applications or obtain prospectuses and other literature.
Automated 24-Hour Services
Tele*Access (registered trademark) (1-800-638-2587) provides information
such as account balance, date and amount of your last transaction, latest
dividend payment, and fund prices and yields. Addition-ally, you have the
ability to request prospectuses, statements, account and tax forms, reorder
checks, and initiate purchase, redemption, and exchange orders for identically
registered accounts.
PC*Access (registered trademark) provides the same information as
Tele*Access, but on a personal computer via dial-up modem.
Account Services
Checking-Write checks for $500 or more on any money market and most bond
fund accounts.
Automatic Investing-Build your account over time by investing directly
from your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to set up systematic investments from one fund
account into another, such as from a money fund into a stock fund. A low, $50
minimum makes it easy to get started.
Automatic Withdrawal-If you need money from your fund account on a
regular basis, you can establish scheduled, automatic redemptions.
Dividend and Capital Gains Payment Options-Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.
Investment Information
Combined Statement-A comprehensive overview of your T. Rowe Price
accounts. The summary page gives your earnings by tax category, provides total
portfolio value, and lists your investments by type-stock, bond, and money
market. Detail pages itemize account transactions by fund.
Quarterly Shareholder Reports-Portfolio managers review the performance
of the funds in plain language and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report-A quarterly newsletter with relevant articles
on market trends, personal financial planning, and T. Rowe Price's economic
perspective.
Insights-A library of information that includes reports on mutual fund
tax issues, investment strategies, and financial markets.
Detailed Investment Guides-Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also
available on disk for PC use), and Guide to Risk-Adjusted Performance can help
you determine and reach your investment goals.
Discount Brokerage
You can trade stocks, bonds, options, precious metals, and other securities at
a substantial savings over regular commission rates. Call a shareholder
service representative for more information.
T. Rowe Price No-Load Mutual Funds
STABILITY
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money
Market
Tax-Exempt Money
CONSERVATIVE INCOME
Adjustable Rate
U.S. Government
Short-Term Bond
Short-Term Global Income
Summit Limited-Term Bond
U.S. Treasury Intermediate
Florida Insured Intermediate
Tax-Free
Maryland Short-Term
Tax-Free Bond
Summit Municipal
Intermediate
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term
Tax-Free Bond
INCOME
Global Government Bond
GNMA
New Income
Spectrum Income
Summit GNMA
U.S. Treasury Long-Term
California Tax-Free Bond
Georgia Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Tax-Free Income
Virginia Tax-Free Bond
AGGRESSIVE INCOME
Emerging Markets Bond
High Yield
International Bond
Tax-Free High Yield
CONSERVATIVE
GROWTH
Balanced
Capital Appreciation
Dividend Growth
Equity Income
Equity Index
Growth & Income
Spectrum Growth
Value
GROWTH
Blue Chip Growth
European Stock
Growth Stock
International Stock
Japan
Mid-Cap Growth
New Era
Small-Cap Value
AGGRESSIVE GROWTH
Capital Opportunity
International Discovery
Latin America
New America Growth
New Asia
New Horizons
OTC
Science & Technology
PERSONAL STRATEGY FUNDS
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
Call if you want to know about any T. Rowe Price fund. We'll send you a
prospectus with more complete information, including management fees and other
expenses. Read it carefully before you invest or send money.
Chart 1 - SEC Chart
Fiscal-Year Performance Comparison: A two-line chart comparing the growth in
an initial $10,000 investment in the Fund with the same investment in the S&P
Mid-Cap Index starting on 6/30/92 and ending on 12/31/94.
