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Form N-CSR T. Rowe Price Equity For: Dec 31

February 22, 2024 10:28 AM EST

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act File Number: 811-07639

T. Rowe Price Equity Funds, Inc.

 

(Exact name of registrant as specified in charter)

100 East Pratt Street, Baltimore, MD 21202

 

(Address of principal executive offices)

David Oestreicher

100 East Pratt Street, Baltimore, MD 21202

 

(Name and address of agent for service)

Registrant’s telephone number, including area code: (410) 345-2000

Date of fiscal year end: December 31

Date of reporting period: December 31, 2023


Item 1. Reports to Shareholders

(a) Report pursuant to Rule 30e-1


Annual
REPORT
December
31,
2023
Institutional
Mid-Cap
Equity
Growth
Fund
T.
ROWE
PRICE
For
more
insights
from
T.
Rowe
Price
investment
professionals,
go
to
troweprice.com
.
Highlights
and
Market
Commentary
Management’s
Discussion
of
Fund
Performance
Performance
and
Expenses
Financial
Highlights
Portfolio
of
Investments
Financial
Statements
and
Notes
Additional
Fund
Information
T.
ROWE
PRICE
Institutional
Mid-Cap
Equity
Growth
Fund
HIGHLIGHTS
The
Institutional
Mid-Cap
Equity
Growth
Fund
advanced
but
underperformed
the
Russell
Midcap
Growth
Index
and
outperformed
its
Lipper
peer
group
index
for
the
12
months
ended
December
31,
2023.
On
a
relative
basis,
our
sector
allocations
in
information
technology
and
health
care
hampered
relative
results,
while
stock
selection
in
financials
proved
beneficial.
We
remain
judicious
in
deploying
capital,
with
a
focus
on
quality
companies
with
durable
growth
prospects
and
prudent
balance
sheets.
While
we
don’t
consider
the
market
to
be
wildly
overvalued,
we
do
believe
there
are
pockets
of
excess.
It
is
our
expectation
that
certain
imbalances
will
correct
themselves,
positioning
the
portfolio
for
stronger
relative
performance
on
the
other
side
of
that
recalibration.
Log
in
to
your
account
at
troweprice.com
for
more
information.
*
An
account
service
fee
will
be
charged
annually
for
each
T.
Rowe
Price
mutual
fund
account
unless
you
meet
criteria
for
a
fee
waiver.
Go
to
troweprice.
com/personal-investing/help/fees-and-minimums.html
to
learn
more
about
this
account
service
fee,
including
other
ways
to
waive
it.
T.
ROWE
PRICE
Institutional
Mid-Cap
Equity
Growth
Fund
Market
Commentary
1
Dear
Investor
Global
stock
and
bond
indexes
were
broadly
positive
during
2023
as
most
economies
managed
to
avoid
the
recession
that
was
widely
predicted
at
the
start
of
the
year.
Technology
companies
benefited
from
investor
enthusiasm
for
artificial
intelligence
developments
and
led
the
equity
rally,
while
fixed
income
benchmarks
rebounded
late
in
the
year
amid
falling
interest
rates.
For
the
12-month
period,
the
technology-oriented
Nasdaq
Composite
Index
rose
about
43%,
reaching
a
record
high
and
producing
the
strongest
result
of
the
major
benchmarks.
Growth
stocks
outperformed
value
shares,
and
developed
market
stocks
generally
outpaced
their
emerging
markets
counterparts.
Currency
movements
were
mixed
over
the
period,
although
a
weaker
dollar
versus
major
European
currencies
was
beneficial
for
U.S.
investors
in
European
securities.
Within
the
S&P
500
Index,
which
finished
the
year
just
short
of
the
record
level
it
reached
in
early
2022,
the
information
technology,
communication
services,
and
consumer
discretionary
sectors
were
all
lifted
by
the
tech
rally
and
recorded
significant
gains.
A
small
group
of
tech-oriented
mega-cap
companies
helped
drive
much
of
the
market’s
advance.
Conversely,
the
defensive
utilities
sector
had
the
weakest
returns
in
the
growth-focused
environment,
and
the
energy
sector
also
lost
ground
amid
declining
oil
prices.
The
financials
sector
bounced
back
from
the
failure
of
three
large
regional
banks
in
the
spring
and
was
one
of
the
top-
performing
segments
in
the
second
half
of
the
year.
The
U.S.
economy
was
the
strongest
among
the
major
markets
during
the
period,
with
gross
domestic
product
growth
coming
in
at
4.9%
in
the
third
quarter,
the
highest
since
the
end
of
2021.
Corporate
fundamentals
were
also
broadly
supportive.
Year-over-year
earnings
growth
contracted
in
the
first
and
second
quarters
of
2023,
but
results
were
better
than
expected,
and
earnings
growth
turned
positive
again
in
the
third
quarter.
Markets
remained
resilient
despite
a
debt
ceiling
standoff
in
the
U.S.,
the
outbreak
of
war
in
the
Middle
East,
the
continuing
conflict
between
Russia
and
Ukraine,
and
a
sluggish
economic
recovery
in
China.
Inflation
remained
a
concern,
but
investors
were
encouraged
by
the
slowing
pace
of
price
increases
as
well
as
the
possibility
that
the
Federal
Reserve
was
nearing
the
end
of
its
rate-hiking
cycle.
The
Fed
held
rates
steady
after
raising
its
short-term
lending
benchmark
rate
to
a
target
range
of
5.25%
to
5.50%
in
July,
the
highest
level
since
March
2001,
and
at
its
final
meeting
of
the
year
in
December,
the
central
bank
indicated
that
there
could
be
three
25-basis-point
rate
cuts
in
2024.
The
yield
of
the
benchmark
10-year
U.S.
Treasury
note
briefly
reached
5.00%
in
October
for
the
first
time
since
late
2007
before
falling
back
to
3.88%
by
period-end,
the
same
level
where
it
started
the
year,
amid
cooler-than-expected
inflation
readings
and
less-hawkish
Fed
rhetoric.
Fixed
income
benchmarks
were
lifted
late
in
the
year
by
falling
yields.
Investment-grade
and
high
yield
corporate
bonds
produced
solid
returns,
supported
by
the
higher
coupons
that
have
become
available
over
the
past
year,
as
well
as
increasing
hopes
that
the
economy
might
be
able
to
avoid
a
recession.
Global
economies
and
markets
showed
surprising
resilience
in
2023,
but
considerable
uncertainty
remains
as
we
look
ahead.
Geopolitical
events,
the
path
of
monetary
policy,
and
the
impact
of
the
Fed’s
rate
hikes
on
the
economy
all
raise
the
potential
for
additional
volatility.
We
believe
this
environment
makes
skilled
active
management
a
critical
tool
for
identifying
risks
and
opportunities,
and
our
investment
teams
will
continue
to
use
fundamental
research
to
help
identify
securities
that
can
add
value
to
your
portfolio
over
the
long
term.
Thank
you
for
your
continued
confidence
in
T.
Rowe
Price.
Sincerely, 
Robert
Sharps
CEO
and
President
T.
ROWE
PRICE
Institutional
Mid-Cap
Equity
Growth
Fund
Management’s
Discussion
of
Fund
Performance
2
INVESTMENT
OBJECTIVE 
The
fund
seeks
to
provide
long-term
capital
appreciation
by
investing
in
mid-cap
stocks
with
potential
for
above-average
earnings
growth.
FUND
COMMENTARY
How
did
the
fund
perform
in
the
past
12
months?
The
Institutional
Mid-Cap
Equity
Growth
Fund
returned
20.62%
for
the
12
months
ended
December
31,
2023.
The
fund
underperformed
the
Russell
Midcap
Growth
Index,
which
returned
25.87%,
and
outperformed
the
Lipper
Mid-Cap
Growth
Funds
Index,
which
returned
20.33%.
(
Past
performance
cannot
guarantee
future
results
.)
What
factors
influenced
the
fund’s
performance?
The
fund
posted
strong
returns
on
an
absolute
basis
but
trailed
the
benchmark
in
a
year
that
was
largely
unconducive
to
our
growth
at
a
reasonable
price
approach.
A
late-year
beta
rally,
exacerbated
by
a
dovish
turn
by
the
Federal
Reserve,
created
pockets
of
froth
reminiscent
of
2021,
in
our
view.
We
were
not
surprised
to
lag
in
a
period
when
risk
discipline
and
valuation
awareness
were
deemphasized.
In
addition
to
monetary
policy,
which
has
been
the
dominant
market
theme
for
some
time,
2023
was
also
shaped
by
emerging
secular
trends
in
technology
and
health
care—namely
artificial
intelligence
(AI)
and
GLP-1.
Limited
exposure
to
those
tailwinds
relative
to
the
Russell
Midcap
Growth
Index
weighed
on
performance.
Conversely,
stock
selection
in
financials,
notably
within
the
capital
markets
and
insurance
industries
that
we
prefer,
added
value.
An
underweight
allocation
to
information
technology,
particularly
within
the
software
industry,
detracted
most
from
relative
results.
Stock
selection
also
had
a
negative
effect.
A
decline
in
orders
early
in
the
year,
largely
due
to
an
inventory
correction
in
its
wireless
business,
resulted
in
a
sell-off
of
shares
of
Keysight
Technologies,
the
largest
global
manufacturer
of
test
and
measurement
solutions.
A
disappointing
outlook
issued
in
August,
attributed
to
factors
including
backlog
normalization
and
general
macroeconomic
weakness,
sent
shares
of
the
company
lower.
On
an
absolute
basis,
however,
the
sector
accounted
for
several
top
performers,
including
Crowdstrike
Holdings,
a
leader
in
the
growing
cybersecurity
market,
and
Marvell
Technology,
an
AI
beneficiary.
An
overweight
in
health
care
and,
to
a
lesser
extent,
stock
choices
in
the
sector
also
weighed
on
relative
performance.
Shares
of
biotechnology
company
Seagen
spiked
on
the
news
that
it
would
be
acquired
by
Pfizer,
and
our
underweight
position
proved
detrimental.
Shares
of
medical
technology
company
Hologic
were
pressured
by
the
ongoing
decline
in
COVID-19
testing-related
demand.
We
maintain
a
favorable
long-term
view
of
the
company,
however.
COVID-19
testing
has
accelerated
the
placement
of
Hologic’s
diagnostic
testing
machines
in
many
medical
facilities,
enabling
the
processing
of
the
company’s
other
diagnostic
offerings
as
well.
Additionally,
we
believe
that
the
market
is
overlooking
the
strength
of
Hologic’s
core
women’s
health
business,
which
we
expect
to
remain
a
meaningful
driver
of
future
growth.
On
the
positive
side,
stock
selection
in
financials
contributed
the
most
to
relative
results.
KKR,
a
leading
diversified
global
investment
firm,
is
a
beneficiary
of
lower
interest
rates,
and
shares
rallied
in
the
wake
of
the
Federal
Reserve’s
final
policy
meeting
of
the
year,
which
set
the
stage
for
potentially
more
significant
rate
cuts
in
2024
than
previously
expected.
An
update
from
the
firm
toward
period-end,
announcing
the
acquisition
of
the
remaining
stake
in
Global
Atlantic
as
well
as
other
strategic
initiatives,
was
also
well
received
by
investors.
FleetCor
Technologies
operates
multiple
business
lines,
including
fuel
cards,
corporate
payments,
tolls,
lodging,
and
gift
cards.
Shares
advanced
through
much
of
the
year
on
solid
results
driven
by
strong
execution
despite
challenging
conditions,
including
secular
pressure
on
its
core
business.
The
company
implemented
strategic
efforts
to
optimize
its
portfolio,
including
the
sale
of
its
Russian
assets.
Specialty
insurance
provider
Assurant
and
electronic
trading
platform
Tradeweb
Markets
also
delivered
strong
returns.
How
is
the
fund
positioned?
While
there
were
no
large
thematic
shifts
in
the
portfolio,
we
were
net
sellers
in
a
year
of
strong
gains,
with
the
market
looking
a
little
full,
in
our
view.
Top
sales
were
largely
motivated
by
valuation,
market
capitalization,
and
position
size
considerations.
That
said,
we
found
attractive
opportunities
in
energy,
where
we
moved
overweight
relative
to
the
benchmark,
and
we
remain
overweight
the
health
care
sector.
We
are
underweight
consumer
discretionary,
but
the
sector
accounted
for
several
top
purchases
this
year.
As
always,
we
maintain
a
long-term
view
and
a
focus
on
quality
companies
with
durable
growth
prospects
and
prudent
balance
sheets.
PERFORMANCE
COMPARISON
Total
Return
Periods
Ended
12/31/23
6
Months
12
Months
Institutional
Mid-Cap
Equity
Growth
Fund
6.55‌%
20.62‌%
Russell
Midcap
Growth
Index
8.56‌
25.87‌
Lipper
Mid-Cap
Growth
Funds
Index
6.12‌
20.33‌
T.
ROWE
PRICE
Institutional
Mid-Cap
Equity
Growth
Fund
3
Energy
remains
a
smaller
sector
allocation
within
the
portfolio,
but
it
has
become
more
relevant
in
recent
years.
A
pullback
in
the
sector,
as
gas
and
oil
prices
declined,
created
compelling
entry
points
in
names
including
EQT
and
TechnipFMC.
EQT
is
the
largest
producer
of
natural
gas
in
the
U.S.,
and
we
believe
it
will
benefit
over
the
long
term
from
secular
natural
gas
tailwinds.
Global
oil
field
service
and
equipment
company
TechnipFMC
is
the
clear
market
leader
in
the
subsea
segment.
We
believe
increased
offshore
spending
will
lead
to
accelerating
cash
flows
and
significant
margin
improvement
for
the
company.
On
the
sell
side,
we
reduced
our
stake
in
Pioneer
Natural
Resources
following
the
announcement
that
the
company
would
be
acquired
by
ExxonMobil.
Our
approach
toward
consumer
discretionary
is
selective
given
the
persistent
headwinds
of
recent
years.
We
focus
on
companies
with
strong
brands
and
innovative
management
teams
that
we
believe
are
capable
of
navigating
an
uneven
recovery
and
taking
share
from
competitors.
Our
holdings
in
hotels,
restaurants,
and
leisure
names
like
Hilton
Worldwide
Holdings,
Yum!
Brands,
Ulta
Beauty,
and
Caesar’s
Entertainment
reflect
those
attributes.
Strength
in
travel
lifted
shares
of
Hilton
Worldwide
Holdings,
the
second-largest
global
hotel
brand,
and
we
took
profits
during
the
year,
but
the
company
remains
a
core
holding.
We
favor
Hilton
for
its
low
capital
costs
and
significant
exposure
to
the
growing
business
and
group
travel
segments.
We
increased
Yum!
Brands,
the
parent
company
of
Taco
Bell,
KFC,
and
Pizza
Hut.
We
like
the
company’s
management
team,
its
franchise
mix,
and
its
brand
and
geographical
diversification.
We
initiated
a
position
in
leading
U.S.
beauty
retailer
Ulta
Beauty.
In
our
view,
shares
were
attractively
valued,
and
we
believe
the
company
is
well
positioned
to
continue
taking
share
in
a
growing
but
fragmented
industry.
We
sold
shares
of
MGM,
a
company
whose
recent
capital
allocation
decisions
have
given
us
pause,
to
fund
a
new
position
in
Caesar’s.
We
like
Caesar’s
disciplined
management
team
and
believe
the
company
will
benefit
from
a
favorable
Las
Vegas
backdrop
and
its
industry-leading
database
of
players,
a
growing
mobile
business,
and
brick-and-
mortar
locations.
Top
sales
included
a
handful
of
information
technology
names.
We
exited
Synopsys,
a
leading
electronic
design
automation
company,
and
reduced
Fortinet,
a
major
global
network
security
provider,
following
solid
share
price
appreciation
and
market
capitalization
considerations.
We
trimmed
semiconductor
holding
KLA,
a
strong
performer
and
frequent
contributor
to
the
fund
since
its
addition
in
2020,
which
had
moved
out
of
our
market
capitalization
range.
The
eliminations
of
software
company
Black
Knight
and
National
Instruments,
an
electronic
equipment,
instruments,
and
components
company,
were
driven
by
acquisitions.
What
is
portfolio
management’s
outlook?
The
favorable
end
to
2023
for
equities
suggests
that
the
highly
sought-after
soft
landing
has
been
achieved.
Despite
a
consensus
view
that
we
will
skirt
a
recession
while
the
market
continues
to
climb,
this
is
not
a
certainty.
Indeed,
we
are
seeing
cracks
in
high-end
consumer
spending
as
well
as
some
weakness
in
the
industrial
economy.
While
we
do
not
consider
the
market
to
be
wildly
overvalued,
we
do
believe
there
are
pockets
of
excess.
It
is
our
expectation
that
certain
imbalances
will
correct
themselves,
positioning
the
portfolio
for
stronger
relative
performance
on
the
other
side
of
that
recalibration.
Accordingly,
we
remain
judicious
in
deploying
capital.
Our
focus
remains
on
owning
quality
companies
with
durable
growth
prospects
and
prudent
balance
sheets.
We
pay
careful
attention
to
risk
and
valuation
relative
to
growth
prospects
and
believe
that
this
disciplined
approach
will
continue
to
serve
clients
well
over
the
long
term.
The
views
expressed
reflect
the
opinions
of
T.
Rowe
Price
as
of
the
date
of
this
report
and
are
subject
to
change
based
on
changes
in
market,
economic,
or
other
conditions.
These
views
are
not
intended
to
be
a
forecast
of
future
events
and
are
no
guarantee
of
future
results.
SECTOR
DIVERSIFICATION
Percent
of
Net
Assets
6/30/23
12/31/23
Health
Care
24.6‌%
24.4‌%
Information
Technology
19.0‌ 
18.5‌ 
Industrials
and
Business
Services
17.2‌ 
16.6‌ 
Consumer
Discretionary
11.2‌ 
12.2‌ 
Financials
7.6‌ 
7.6‌ 
Materials
5.6‌ 
5.8‌ 
Communication
Services
3.9‌ 
4.6‌ 
Energy
3.5‌ 
4.1‌ 
Consumer
Staples
4.1‌ 
3.6‌ 
Real
Estate
1.1‌ 
0.9‌ 
Utilities
0.0‌ 
0.0‌ 
Other
and
Reserves
2.2‌ 
1.7‌ 
Total
100.0‌%
100.0‌%
Historical
weightings
reflect
current
industry/sector
classifications.
T.
ROWE
PRICE
Institutional
Mid-Cap
Equity
Growth
Fund
4
RISKS
OF
INVESTING
IN
THE
FUND
PRINCIPAL
RISKS
As
with
any
fund,
there
is
no
guarantee
that
the
fund
will
achieve
its
objective(s).
The
fund’s
share
price
fluctuates,
which
means
you
could
lose
money
by
investing
in
the
fund.
The
principal
risks
of
investing
in
this
fund,
which
may
be
even
greater
during
periods
of
market
disruption
or
volatility,
are
summarized
as
follows:
Market
conditions.
The
value
of
the
fund’s
investments
may
decrease,
sometimes
rapidly
or
unexpectedly,
due
to
factors
affecting
an
issuer
held
by
the
fund,
particular
industries,
or
the
overall
securities
markets.
A
variety
of
factors
can
increase
the
volatility
of
the
fund’s
holdings
and
markets
generally,
including
political
or
regulatory
developments,
recessions,
inflation,
rapid
interest
rate
changes,
war
or
acts
of
terrorism,
natural
disasters,
and
outbreaks
of
infectious
illnesses
or
other
widespread
public
health
issues.
Certain
events
may
cause
instability
across
global
markets,
including
reduced
liquidity
and
disruptions
in
trading
markets,
while
some
events
may
affect
certain
geographic
regions,
countries,
sectors,
and
industries
more
significantly
than
others.
These
adverse
developments
may
cause
broad
declines
in
market
value
due
to
short-term
market
movements
or
for
significantly
longer
periods
during
more
prolonged
market
downturns.
Mid-cap
stocks.
Investments
in
securities
issued
by
mid-cap
companies
are
likely
to
be
more
volatile
than
investments
in
securities
issued
by
larger
companies.
Medium-sized
companies
may
have
less
experienced
management,
narrower
product
lines,
and
less
capital
reserves
and
liquidity
than
larger
companies.
They
are,
therefore,
more
sensitive
to
economic,
market,
and
industry
changes.
Growth
investing.
The
fund’s
growth
approach
to
investing
could
cause
it
to
underperform
other
stock
funds
that
employ
a
different
investment
style.
Growth
stocks
tend
to
be
more
volatile
than
certain
other
types
of
stocks,
and
their
prices
may
fluctuate
more
dramatically
than
the
overall
stock
market.
A
stock
with
growth
characteristics
can
have
sharp
price
declines
due
to
decreases
in
current
or
expected
earnings
and
may
lack
dividends
that
can
help
cushion
its
share
price
in
a
declining
market.
BENCHMARK
INFORMATION
Note:
Portions
of
the
mutual
fund
information
contained
in
this
report
was
supplied
by
Lipper,
a
Refinitiv
Company,
subject
to
the
following:
Copyright
2024
©
Refinitiv.
All
rights
reserved.
Any
copying,
republication
or
redistribution
of
Lipper
content
is
expressly
prohibited
without
the
prior
written
consent
of
Lipper.
Lipper
shall
not
be
liable
for
any
errors
or
delays
in
the
content,
or
for
any
actions
taken
in
reliance
thereon.
Note:
London
Stock
Exchange
Group
plc
and
its
group
undertakings
(collectively,
the
“LSE
Group”).
©
LSE
Group
2024.
FTSE
Russell
is
a
trading
name
of
certain
of
the
LSE
Group
companies.  “Russell
®
” is/are
a
trademark(s)
of
the
relevant
LSE
Group
companies
and
is/are
used
by
any
other
LSE
Group
company
under
license.
All
rights
in
the
FTSE
Russell
indexes
or
data
vest
in
the
relevant
LSE
Group
company
which
owns
the
index
or
the
data.
Neither
LSE
Group
nor
its
licensors
accept
any
liability
for
any
errors
or
omissions
in
the
indexes
or
data
and
no
party
may
rely
on
any
indexes
or
data
contained
in
this
communication.
No
further
distribution
of
data
from
the
LSE
Group
is
permitted
without
the
relevant
LSE
Group
company’s
express
written
consent.
The
LSE
Group
does
not
promote,
sponsor
or
endorse
the
content
of
this
communication.
The
LSE
Group
is
not
responsible
for
the
formatting
or
configuration
of
this
material
or
for
any
inaccuracy
in
T.
Rowe
Price’s
presentation
thereof.
T.
ROWE
PRICE
Institutional
Mid-Cap
Equity
Growth
Fund
5
TWENTY-FIVE
LARGEST
HOLDINGS
Percent
of
Net
Assets
12/31/23
Microchip
Technology
3.2‌%
Marvell
Technology
2.6‌ 
Hologic
2.6‌ 
Agilent
Technologies
2.3‌ 
Teleflex
2.1‌ 
Crowdstrike
Holdings
1.9‌ 
Hilton
Worldwide
Holdings
1.9‌ 
Ingersoll
Rand
1.8‌ 
Textron
1.8‌ 
Trade
Desk
1.7‌ 
Ball
1.7‌ 
JB
Hunt
Transport
Services
1.7‌ 
Avantor
1.6‌ 
Domino's
Pizza
1.5‌ 
PTC
1.5‌ 
Equifax
1.5‌ 
KKR
1.5‌ 
Spotify
Technology
1.4‌ 
Martin
Marietta
Materials
1.4‌ 
Veeva
Systems
1.4‌ 
Keysight
Technologies
1.4‌ 
Bruker
1.3‌ 
Avery
Dennison
1.3‌ 
Cheniere
Energy
1.3‌ 
Burlington
Stores
1.2‌ 
Total
43.6‌%
Note:
The
information
shown
does
not
reflect
any
exchange-traded
funds
(ETFs),
cash
reserves,
or
collateral
for
securities
lending
that
may
be
held
in
the
portfolio.
T.
ROWE
PRICE
Institutional
Mid-Cap
Equity
Growth
Fund
6
GROWTH
OF
$1
MILLION 
This
chart
shows
the
value
of
a
hypothetical
$1
million
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
benchmarks,
which
include
a
broad-based
market
index
and
may
also
include
a
peer
group
average
or
index.
Market
indexes
do
not
include
expenses,
which
are
deducted
from
fund returns
as
well
as
mutual fund
averages
and
indexes.
INSTITUTIONAL
MID-CAP
EQUITY
GROWTH
FUND
AVERAGE
ANNUAL
COMPOUND
TOTAL
RETURN
EXPENSE
RATIO
FUND
EXPENSE
EXAMPLE
As
a
mutual
fund
shareholder,
you
may
incur
two
types
of
costs:
(1)
transaction
costs,
such
as
redemption
fees
or
sales
loads,
and
(2)
ongoing
costs,
including
management
fees,
distribution
and
service
(12b-1)
fees,
and
other
fund
expenses.
The
following
example
is
intended
to
help
you
understand
your
ongoing
costs
(in
dollars)
of
investing
in
the
fund
and
to
compare
these
costs
with
the
ongoing
costs
of
investing
in
other
mutual
funds.
The
example
is
based
on
an
investment
of
$1,000
invested
at
the
beginning
of
the
most
recent
six-month
period
and
held
for
the
entire
period.
Actual
Expenses
The
first
line
of
the
following
table
(Actual)
provides
information
about
actual
account
values
and
actual
expenses.
You
may
use
the
information
on
this
line,
together
with
your
account
balance,
to
estimate
the
expenses
that
you
paid
over
the
period.
Simply
divide
your
account
value
by
$1,000
(for
example,
an
$8,600
account
value
divided
by
$1,000
=
8.6),
then
multiply
the
result
by
the
number
on
the
first
line
under
the
heading
“Expenses
Paid
During
Period”
to
estimate
the
expenses
you
paid
on
your
account
during
this
period.
Hypothetical
Example
for
Comparison
Purposes
The
information
on
the
second
line
of
the
table
(Hypothetical)
is
based
on
hypothetical
account
values
and
expenses
derived
from
the
fund’s
actual
expense
ratio
and
an
assumed
5%
per
year
rate
of
return
before
expenses
(not
the
fund’s
actual
return).
You
may
compare
the
ongoing
costs
of
investing
in