Item 1. Report to Shareholders
T. ROWE PRICE MID-CAP GROWTH FUND
- --------------------------------------------------------------------------------
Certified Financials
T. ROWE PRICE MID-CAP GROWTH FUND
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Certified Financials (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Mid-Cap Growth shares
6 Months Year
Ended Ended
6/30/03 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98
------- -------- -------- -------- -------- --------
NET ASSET VALUE
Beginning of period $ 31.04 $ 39.40 $ 39.79 $ 40.13 $ 34.08 $ 28.60
Investment activities
Net investment
income (loss) (0.08) (0.17) (0.13) (0.03) (0.03) (0.03)
Net realized
and unrealized
gain (loss) 5.68 (8.19) (0.26) 2.96 7.96 6.24
Total from
investment
activities 5.60 (8.36) (0.39) 2.93 7.93 6.21
Distributions
Net realized gain - - - (3.27) (1.88) (0.73)
NET ASSET VALUE
End of period $ 36.64 $ 31.04 $ 39.40 $ 39.79 $ 40.13 $ 34.08
------- ------- ------- ------- ------- -------
Ratios/Supplemental Data
Total return^ 18.04% (21.22)% (0.98)% 7.43% 23.78% 22.00%
Ratio of total
expenses to
average net assets 0.90%! 0.88% 0.89% 0.86% 0.87% 0.91%
Ratio of net
investment income
(loss) to average
net assets (0.51)%! (0.50%) (0.35)% (0.09)% (0.09)% (0.14)%
Portfolio turnover
rate 28.4%! 36.0% 43.0% 53.6% 53.3% 46.7%
Net assets,
end of period
(in millions) $ 7,509 $ 5,713 $ 6,739 $ 6,589 $ 5,243 $ 3,310
^ 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.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE MID-CAP GROWTH FUND
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Certified Financials(Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Mid-Cap Growth-Advisor Class shares
6 Months Year 3/31/00
Ended Ended Through
6/30/03 12/31/02 12/31/01 12/31/00
------- -------- -------- --------
NET ASSET VALUE
Beginning of period $ 30.94 $ 39.39 $ 39.83 $ 44.13
Investment activities
Net investment
income (loss) (0.02)* (0.12)* (0.08) 0.01**
Net realized and
unrealized gain (loss) 5.56 (8.33) (0.36) (1.04)
Total from
investment activities 5.54 (8.45) (0.44) (1.03)
Distributions
Net realized gain - - - (3.27)
NET ASSET VALUE
End of period $ 36.48 $ 30.94 $ 39.39 $ 39.83
-------- --------- --------- --------
Ratios/Supplemental Data
Total return^ 17.91%* (21.45)%* (1.10)% (2.22)%
Ratio of total
expenses to average
net assets 1.10%*! 1.10%* 1.04% 0.70%!
Ratio of net
investment income
(loss) to average
net assets (0.72)%*! (0.69)%* (0.56)% 0.09%!
Portfolio turnover
rate 28.4%! 36.0% 43.0% 53.6%
Net assets,
end of period
(in thousands) $ 131,193 $ 50,640 $ 16,736 $ 2,303
* Excludes expenses in excess of a 1.10% contractual expense limitation
in effect through 12/31/03.
** The amount presented is calculated pursuant to a methodology
prescribed by the Securities and Exchange Commission for a share
outstanding throughout the period. This amount is inconsistent with
the fund's aggregate gains and losses because of the timing of sales
and redemptions of fund shares in relation to fluctuating market
values for the investment portfolio.
^ 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.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE MID-CAP GROWTH FUND
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Certified Financials (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Mid-Cap Growth-R Class shares
6 Months 9/30/02
Ended Through
6/30/03 12/31/02
------- --------
NET ASSET VALUE
Beginning of period $ 31.01 $ 28.61
Investment activities
Net investment income (loss) 0.03*++ (0.07)*
Net realized and unrealized gain (loss) 5.46 2.47++
Total from investment activities 5.49 2.40
NET ASSET VALUE
End of period $ 36.50 $ 31.01
--------- --------
Ratios/Supplemental Data
Total return^ 17.70%* 8.39%*
Ratio of total expenses to
average net assets 1.40%!* 1.40 %!*
Ratio of net investment
income (loss) to average
net assets (1.03)%!* (0.88%)!*
Portfolio turnover rate 28.4%! 36.0%
Net assets, end of period
(in thousands) $ 7,052 $ 108
* Excludes expenses in excess of a 1.40% contractual expense limitation
in effect through 4/30/04.
++ The amount presented is calculated pursuant to a methodology
prescribed by the Securities and Exchange Commission for a share
outstanding throughout the period. This amount is inconsistent with
the fund's aggregate gains and losses because of the timing of sales
and redemptions of fund shares in relation to fluctuating market
values for the investment portfolio.
^ 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.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE MID-CAP GROWTH FUND
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Certified Financials (Unaudited) June 30, 2003
PORTFOLIO OF INVESTMENTS Shares Value
- --------------------------------------------------------------------------------
In thousands
COMMON STOCKS 94.5%
CONSUMER DISCRETIONARY 15.3%
Hotels, Restaurants & Leisure 2.3%
Cheesecake Factory * 1,500,000 $ 53,835
Fairmont Hotels 2,064,900 48,319
Starbucks * 2,900,000 71,108
173,262
Household Durables 0.5%
Garmin * 950,000 37,876
37,876
Leisure Equipment & Products 1.0%
Brunswick 3,000,000 75,060
75,060
Media 3.6%
Catalina Marketing *! 3,000,000 52,950
Cox Radio, Class A * 2,400,000 55,464
Lamar Advertising, Class A * 1,000,000 35,210
Rogers Communications, Class B 3,100,000 49,755
Scholastic * 1,229,900 36,627
Scripps, Class A 260,000 23,067
Westwood One * 600,000 20,358
273,431
Multiline Retail 2.4%
99 Cents Only Stores * 500,000 17,160
Dollar Tree Stores * 2,800,000 88,844
Family Dollar Stores 2,150,000 82,022
188,026
Specialty Retail 4.8%
Best Buy * 2,400,000 105,408
O'Reilly Automotive * 2,000,000 66,780
Ross Stores 1,750,000 74,795
Weight Watchers * 1,300,000 59,137
Williams-Sonoma * 2,100,000 61,320
367,440
Textiles, Apparel, & Luxury Goods 0.7%
Coach * 1,150,000 $ 57,201
57,201
Total Consumer Discretionary 1,172,296
CONSUMER STAPLES 1.9%
Beverages 0.4%
Cott * 1,614,900 33,412
33,412
Food & Staples Retailing 1.0%
Whole Foods Market * 1,650,000 78,425
78,425
Personal Products 0.5%
Estee Lauder, Class A 1,000,000 33,530
33,530
Total Consumer Staples 145,367
ENERGY 7.0%
Energy Equipment & Services 4.8%
BJ Services * 2,700,000 100,872
Cooper Cameron * 1,000,000 50,380
Diamond Offshore Drilling 3,200,000 67,168
FMC Technologies * 2,850,000 59,993
Smith International * 2,400,000 88,176
366,589
Oil & Gas 2.2%
Devon Energy 1,450,000 77,430
Murphy Oil 700,000 36,820
XTO Energy 2,500,000 50,275
164,525
Total Energy 531,114
FINANCIALS 7.5%
Capital Markets 4.0%
Charles Schwab 3,000,000 30,270
Eaton Vance 1,400,000 44,240
Franklin Resources 1,000,000 $ 39,070
Investor's Financial Services 1,000,000 29,010
Legg Mason 800,000 51,960
Waddell & Reed Financial, Class A ! 4,225,000 108,456
303,006
Commercial Banks 0.1%
Silicon Valley Bancshares * 500,000 11,905
11,905
Diversified Financial Services 0.7%
Principal Financial Group 1,600,000 51,600
51,600
Insurance 2.2%
AMBAC 350,000 23,187
Nationwide Financial Services, Class A 1,600,000 52,000
Protective Life 1,600,000 42,800
Willis Group Holdings 1,600,000 49,200
167,187
Thrifts & Mortgage Finance 0.5%
Radian Group 1,100,000 40,315
40,315
Total Financials 574,013
HEALTH CARE 20.7%
Biotechnology 5.5%
Affymetrix * 900,000 17,739
Alkermes * 1,750,000 18,813
Amylin Pharmaceuticals * 1,350,000 29,552
Cephalon * 1,200,000 49,392
Gilead Sciences * 1,700,000 94,486
Human Genome Sciences * 1,900,000 24,168
IDEC Pharmaceuticals * 1,000,000 34,000
MedImmune * 1,750,000 63,647
Millennium Pharmaceuticals * 2,100,000 33,033
Neurocrine Biosciences * 500,000 24,970
Protein Design Labs * 1,100,000 15,378
Vertex Pharmaceuticals * 1,000,000 14,600
419,778
Health Care Equipment & Supplies 1.9%
Apogent Technologies * 2,000,000 $ 40,000
Cytyc * 1,000,000 10,520
Invitrogen * 400,000 15,348
St. Jude Medical * 700,000 40,250
Waters Corporation * 1,400,000 40,782
146,900
Health Care Providers & Services 9.4%
AmerisourceBergen 950,000 65,882
Anthem * 1,400,000 108,010
Davita * 1,900,000 50,882
Health Management, Class A 3,500,000 64,575
Laboratory Corporation of America * 2,500,000 75,375
Manor Care * 3,000,000 75,030
Omnicare ! 5,100,000 172,329
Triad Hospitals * 1,250,000 31,025
WellChoice * 900,000 26,352
Wellpoint Health Networks * 600,000 50,580
720,040
Pharmaceuticals 3.9%
Andrx * 3,200,000 63,680
Barr Laboratories * 1,350,000 88,425
IVAX * 2,300,000 41,055
Teva Pharmaceutical ADR 1,800,000 102,474
295,634
Total Health Care 1,582,352
INDUSTRIALS & BUSINESS SERVICES 15.0%
Aerospace & Defense 2.8%
Alliant Techsystems * 1,500,000 77,865
L-3 Communications Holdings * 900,000 39,141
Rockwell Collins 4,100,000 100,983
217,989
Air Freight & Logistics 0.7%
Expeditors International of Washington 1,600,000 55,424
55,424
Airlines 0.1%
JetBlue Airways * 250,000 $ 10,573
10,573
Building Products 0.9%
American Standard * 900,000 66,537
66,537
Commercial Services & Supplies 6.4%
Apollo Group, Class A * 600,000 37,056
ChoicePoint * 3,100,000 107,012
Education Management * 1,000,000 53,180
Hewitt Associates *! 2,020,000 47,571
Manpower 2,400,000 89,016
Robert Half International * 4,000,000 75,760
Viad 3,500,000 78,365
487,960
Industrial Conglomerates 1.0%
Roper Industries ! 2,000,000 74,400
74,400
Machinery 2.9%
Danaher 1,200,000 81,660
ITT Industries 1,400,000 91,644
Oshkosh Truck, Class B 800,000 47,456
220,760
Trading Companies & Distributors 0.2%
Fastenal 350,000 11,879
MSC Industrial Direct, Class A * 200,000 3,580
15,459
Total Industrials & Business Services 1,149,102
INFORMATION TECHNOLOGY 23.4%
Communications Equipment 1.0%
Harris 2,500,000 75,125
75,125
Computer & Peripherals 1.7%
Diebold 1,300,000 56,225
Lexmark International, Class A * 350,000 24,770
Seagate Technology 3,000,000 52,950
133,945
Electronic Equipment & Instruments 2.1%
CDW * 1,300,000 $ 59,540
Celestica * 2,500,000 39,400
Jabil Circuit * 1,800,000 39,780
Molex, Class A 1,000,000 23,179
161,899
Internet Software & Services 3.0%
Expedia, Class A * 500,000 38,190
InterActiveCorp * 1,600,000 63,312
Monster Worldwide * 2,500,000 49,325
VeriSign * 5,700,000 78,831
229,658
IT Services 7.9%
Affiliated Computer Services, Class A * 1,500,000 68,595
BearingPoint * 6,000,000 57,900
BISYS Group * 2,600,000 47,762
Ceridian * 4,100,000 69,577
Certegy * 3,000,000 83,250
DST Systems * 2,300,000 87,400
Fiserv * 1,700,000 60,537
Iron Mountain * 2,200,000 81,598
SunGard Data Systems * 1,750,000 45,342
601,961
Semiconductor & Semiconductor Equipment 4.0%
Intersil Holding, Class A * 2,100,000 55,881
KLA-Tencor * 900,000 41,841
Maxim Integrated Products 800,000 27,352
Microchip Technology 3,100,000 76,353
Novellus Systems * 1,200,000 43,945
QLogic * 550,000 26,582
Semtech * 2,250,000 32,040
303,994
Software 3.7%
Adobe Systems 1,700,000 54,519
Informatica * 1,300,000 8,983
Intuit * 1,000,000 44,530
Mercury Interactive * 1,000,000 38,610
Network Associates * 2,600,000 32,968
PeopleSoft * 2,250,000 $ 39,577
Siebel Systems * 1,300,000 12,402
Synopsys * 400,000 24,740
VERITAS Software * 1,000,000 28,670
284,999
Total Information Technology 1,791,581
MATERIALS 1.9%
Chemicals 1.0%
Potash Corp./Saskatchewan 1,200,000 76,800
76,800
Metals & Mining 0.9%
Newmont Mining 2,000,000 64,920
64,920
Total Materials 141,720
TELECOMMUNICATION SERVICES 1.7%
Wireless Telecommunication Services 1.7%
Nextel Communications, Class A * 4,500,000 81,360
Triton PCS Holdings, Class A * 2,200,000 11,110
Western Wireless, Class A * 3,302,900 38,082
Total Telecommunication Services 130,552
Total Miscellaneous Common Stocks 0.1% 10,830
Total Common Stocks (Cost $5,840,603) 7,228,927
SHORT-TERM INVESTMENTS 6.1%
Money Market Fund 6.1%
T. Rowe Price Government Reserve
Investment Fund, 1.01% #! 466,566,828 466,567
Total Short-Term Investments (Cost $466,567) 466,567
Total Investments in Securities
100.6% of Net Assets (Cost $6,307,170) $ 7,695,494
Other Assets Less Liabilities (48,339)
NET ASSETS $ 7,647,155
------------
# Seven-day yield
* Non-income producing
! Affiliated company - See Note 2.
ADR American Depository Receipts
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE MID-CAP GROWTH FUND
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Certified Financials (Unaudited) June 30, 2003
STATEMENT OF ASSETS AND LIABILITIES In thousands
- --------------------------------------------------------------------------------
Assets
Investments in securities, at value
Affiliated companies (cost $805,907) $ 922,273
Other companies (cost $5,501,263) 6,773,221
Total investments in securities 7,695,494
Other assets 33,647
Total assets 7,729,141
Liabilities
Total liabilities 81,986
NET ASSETS $ 7,647,155
------------
Net Assets Consist of:
Undistributed net investment income (loss) $ (16,146)
Undistributed net realized gain (loss) (542,913)
Net unrealized gain (loss) 1,388,324
Paid-in-capital applicable to
208,747,623 shares of
$0.01 par value capital
stock outstanding;
1,000,000,000 shares authorized 6,817,890
NET ASSETS $ 7,647,155
------------
NET ASSET VALUE PER SHARE
Mid-Cap Growth shares
($7,508,909,375/204,957,807 shares outstanding) $ 36.64
------------
Mid-Cap Growth - Advisor Class shares
($131,193,168/3,596,615 shares outstanding) $ 36.48
------------
Mid-Cap Growth - R Class shares
($7,052,175/193,201 shares outstanding) $ 36.50
------------
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE MID-CAP GROWTH FUND
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Certified Financials (Unaudited)
STATEMENT OF OPERATIONS In thousands
- --------------------------------------------------------------------------------
6 Months
Ended
6/30/03
Investment Income (Loss)
Income
Dividend $ 9,721
Income distributions from mutual funds 2,173
Total income 11,894
Expenses
Investment management 21,004
Shareholder servicing
Mid-Cap Growth shares 6,323
Mid-Cap Growth-Advisor Class shares 61
Mid-Cap Growth-R Class shares 2
Prospectus and shareholder reports
Mid-Cap Growth shares 368
Mid-Cap Growth-Advisor Class shares 12
Custody and accounting 140
Distribution
Mid-Cap Growth-Advisor Class shares 106
Mid-Cap Growth-R Class shares 4
Registration 103
Directors 24
Legal and audit 17
Total expenses 28,164
Expenses paid indirectly (124)
Net expenses 28,040
Net investment income (loss) (16,146)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities 73,434
Change in net unrealized gain (loss) on securities 1,061,076
Net realized and unrealized gain (loss) 1,134,510
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 1,118,364
-----------
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE MID-CAP GROWTH FUND
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Certified Financials (Unaudited)
STATEMENT OF CHANGES IN NET ASSETS In thousands
- --------------------------------------------------------------------------------
6 Months Year
Ended Ended
6/30/03 12/31/02
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ (16,146) $ (30,761)
Net realized gain (loss) 73,434 (159,825)
Change in net unrealized gain (loss) 1,061,076 (1,290,959)
Increase (decrease) in net assets
from operations 1,118,364 (1,481,545)
Capital share transactions *
Shares sold
Mid-Cap Growth shares 1,271,338 2,255,339
Mid-Cap Growth-Advisor Class shares 72,894 51,193
Mid-Cap Growth-R Class shares 7,034 100
Shares redeemed
Mid-Cap Growth shares (576,644) (1,805,314)
Mid-Cap Growth-Advisor Class shares (9,166) (12,078)
Mid-Cap Growth-R Class shares (465) -
Increase (decrease) in net assets from
capital share transactions 764,991 489,240
Net Assets
Increase (decrease) during period 1,883,355 (992,305)
Beginning of period 5,763,800 6,756,105
End of period $ 7,647,155 $ 5,763,800
----------- ------------
*Share information
Shares sold
Mid-Cap Growth shares 38,933 64,994
Mid-Cap Growth-Advisor Class shares 2,246 1,570
Mid-Cap Growth-R Class shares 203 4
Shares redeemed
Mid-Cap Growth shares (18,018) (51,996)
Mid-Cap Growth-Advisor Class shares (286) (358)
Mid-Cap Growth-R Class shares (13) -
Increase (decrease) in shares outstanding 23,065 14,214
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE MID-CAP GROWTH FUND
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Certified Financials (Unaudited) June 30, 2003
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 (the 1940 Act) as a diversified, open-end
management investment company. The fund seeks to provide long-term capital
appreciation by investing in mid-cap stocks with potential for
above-average earnings growth. The fund has three classes of shares:
Mid-Cap Growth Fund (Mid-Cap Growth Class), offered since June 30, 1992,
Mid-Cap Growth Fund-Advisor Class (Advisor Class), offered since March 31,
2000, and Mid-Cap Growth Fund-R Class (R Class), offered since September
30, 2002. Advisor Class shares are offered only through brokers and other
financial intermediaries, and R Class shares are only available to small
retirement plans serviced by intermediaries. The Advisor Class and R Class
each operate under separate Board-approved Rule 12b-1 plans, pursuant to
which each class compensates financial intermediaries for distribution and
certain administrative services. Each class has exclusive voting rights on
matters related solely to that class, separate voting rights on matters
that relate to all classes, and, in all other respects, the same rights and
obligations as the other classes. The accompanying financial statements
were prepared in accordance with accounting principles generally accepted
in the United States of America, which require the use of estimates made by
fund management.
Valuation
Investments are valued at the close of the New York Stock Exchange (NYSE),
normally 4 p.m. ET, each day that the NYSE is open for business. Equity
securities listed or regularly traded on a securities exchange or in the
over-the-counter market are valued at the last quoted sale price, or
official closing price for certain markets, at the time the valuations are
made. A security that 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 are
valued at the mean of the latest bid and ask prices for domestic securities
and the last quoted sale price for international securities.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
Other investments and those 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.
Class Accounting
The Advisor Class and R Class each pay distribution and administrative
expenses in the form of Rule 12b-1 fees, in an amount not exceeding 0.25%
and 0.50%, respectively, of the class's average net assets. Shareholder
servicing, prospectus, and shareholder report expenses incurred by each
class are charged directly to the class to which they relate. Expenses
common to all classes, investment income, and realized and unrealized gains
and losses are allocated to the classes based upon the relative daily net
assets of each class. Income distributions are declared and paid by each
class on an annual basis. Capital gain distributions, if any, are declared
and paid by the fund, typically on an annual basis.
Expenses Paid Indirectly
Certain security trades are directed to brokers who have agreed to rebate a
portion of the related commission to the fund to pay fund expenses.
Additionally, credits earned on temporarily uninvested cash balances at the
custodian are used to reduce the fund's custody charges. Total expenses in
the accompanying statement of operations are presented before reduction for
rebates and credits, which totaled $121,000 and $3,000, respectively, for
the six months ended June 30, 2003.
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.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Affiliated Companies
The fund may invest in certain securities that are considered affiliated
companies. As defined by the 1940 Act, an affiliated company is one in
which the fund owns 5% or more of the outstanding voting securities. At
June 30, 2003, the value of affiliated companies totaled $922,273,000,
representing 12.0% of the value of the fund's investments in securities.
For the six months then ended, $1,687,000 (17.4%) of dividend income,
$2,173,000 (100.0%) of income distributions from mutual funds, reflected in
the accompanying financial statements resulted from transactions with
affiliated companies.
Other
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $1,454,291,000 and $855,470,000, respectively, for
the six months ended June 30, 2003.
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 to
shareholders all of its taxable income and gains. Federal income tax
regulations differ from generally accepted accounting principles;
therefore, distributions determined in accordance with tax regulations may
differ in amount or character from net investment income and realized gains
for financial reporting purposes. Financial reporting records are adjusted
for permanent book/tax differences to reflect tax character. Temporary
differences are not adjusted. The amount and character of tax-basis
distributions and composition of net assets are finalized at fiscal
year-end; accordingly, tax-basis balances have not been determined as of
June 30, 2003.
For tax purposes, the fund has elected to treat net capital losses realized
between November 1 and December 31 of each year as occurring on the first
day of the following tax year; consequently, $68,560,000 of realized losses
recognized for financial reporting purposes in the year ended December 31,
2002 were recognized for tax purposes on January 1, 2003. Further, the fund
intends to retain realized gains to the extent of available capital loss
carryforwards. As of December 31, 2002, the fund had $547,787,000 of unused
capital loss carryforwards, of which $215,779,000 expire in 2009, and
$332,008,000 expire in 2010.
At June 30, 2003, the cost of investments for federal income tax purposes
was $6,307,170,000. Net unrealized gain aggregated $1,388,324,000 at
period-end, of which $1,758,125,000 related to appreciated investments and
$369,801,000 related to depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price
Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. The
investment management agreement between the fund and the manager provides
for an annual investment management fee, which is computed daily and paid
monthly. The fee consists of an individual fund fee, equal to 0.35 % of the
fund's average daily net assets, and the fund's pro-rata share of a group
fee. The group fee is calculated based on the combined net assets of
certain mutual funds sponsored by Price Associates (the group) applied to a
graduated fee schedule, with rates ranging from 0.48% for the first $1
billion of assets to 0.295% for assets in excess of $120 billion. The
fund's portion of the group fee is determined by the ratio of its net
assets to those of the group. At June 30, 2003, the effective annual group
fee rate was 0.32%, and investment management fee payable totaled
$4,158,000.
Through December 31, 2003 for the Advisor Class and through April 30, 2004
for the R Class, the manager is required to bear any expenses, excluding
interest, taxes, brokerage commissions, and extraordinary expenses that
would cause the class's ratio of total expenses to average net assets
(expense ratio) to exceed 1.10% and 1.40% respectively. Thereafter, through
December 31, 2005 for the Advisor Class and through April 30, 2006 for the
R Class, each class is required to reimburse the manager for these
expenses, provided that its average net assets have grown or expenses have
declined sufficiently to allow reimbursement without causing its expense
ratio to exceed 1.10% and 1.40%, respectively. At June 30, 2003, Advisor
Class expenses in the amount of $14,000 remain subject to reimbursement
through December 31, 2005. R Class expenses in the amount of $0 remain
subject to reimbursement through April 30, 2006.
In addition, the fund has entered into service agreements with Price
Associates and two wholly owned subsidiaries of Price Associates
(collectively, Price). Price Associates computes the daily share prices and
maintains the financial records of the fund. T. Rowe Price Services, Inc.
provides shareholder and administrative services in its capacity as the
fund's transfer and dividend disbursing agent. T. Rowe Price Retirement
Plan Services, Inc. provides subaccounting and recordkeeping services for
certain retirement accounts invested in Mid-Cap Growth class and R Class.
Expenses incurred pursuant to these service agreements totaled $4,343,000
for the six months ended June 30, 2003, of which $813,000 was payable at
period-end.
Additionally, the fund is one of several mutual funds in which certain
college savings plans managed by Price Associates may invest. As approved
by the fund's Board of Directors, shareholder servicing costs associated
with each college savings plan are borne by the fund in proportion to the
average daily value of its shares owned by the college savings plan. For
the six months ended June 30, 2003, the Mid-Cap Growth share class was
charged $84,000 for shareholder servicing costs related to the college
savings plans, of which $68,000 was for services provided by Price and
$16,000 was payable at period-end. At June 30, 2003, approximately 0.5% of
the outstanding shares of the Mid-Cap Growth class were held by college
savings plans.
The fund is also one of several mutual funds sponsored by Price Associates
(underlying Price funds) in which the T. Rowe Price Retirement Funds
(Retirement Funds) may invest. The Retirement Funds do not invest in the
underlying Price funds for the purpose of exercising management or control.
Pursuant to special servicing agreements, expenses associated with the
operation of the Retirement Funds are borne by each underlying Price fund
to the extent of estimated savings to it and in proportion to the average
daily value of its shares owned by the Retirement Funds. Expenses allocated
under these agreements are reflected as shareholder servicing expense in
the accompanying financial statements. For the six months ended June 30,
2003, the Mid-Cap Growth class was allocated $19,000 of Retirement Funds'
expenses, of which $10,000 related to services provided by Price and $1,000
was payable at period-end. At June 30, 2003, approximately 0.2% of the
outstanding shares of the Mid-Cap Growth class were held by the Retirement
Funds.
The fund may invest in the T. Rowe Price Reserve Investment Fund and T.
Rowe Price Government Reserve Investment Fund (collectively, the Reserve
Funds), open-end management investment companies managed by Price
Associates. The Reserve Funds are offered as cash management options only
to mutual funds, trusts, and other accounts managed by Price Associates
and/or 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, 2003, totaled
$2,173,000.
Item 2. Code of Ethics.
Not required at this time.
Item 3. Audit Committee Financial Expert.
Not required at this time.
Item 4. Principal Accountant Fees and Services.
Not required at this time.
Item 5. Audit Committee of Listed Registrants.
Not required at this time.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. [Reserved]
Item 9. Controls and Procedures
(a) The registrant's principal executive officer and principal financial officer
have evaluated the registrant's disclosure controls and procedures within 90
days of this filing and have concluded that the registrant's disclosure controls
and procedures were effective, as of that date, in ensuring that information
required to be disclosed by the registrant in this Form N-CSR was recorded,
processed, summarized, and reported timely.
(b) The registrant's principal executive officer and principal financial officer
are aware of no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 10. Exhibits.
(a)(1) Not required at this time.
(a)(2) Separate certifications by the registrant's principal executive officer
and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of
1940, are attached.
(b) A certification by the registrant's principal executive officer and
principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940,
is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
T. Rowe Price Mid-Cap Growth Fund, Inc.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date August 22, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date August 22, 2003
By /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date August 22, 2003