Item 1. Report to Shareholders
DECEMBER 31, 2004
MID-CAP GROWTH FUND
Annual Report
T. Rowe Price
The views and opinions in this report were current as of December 31, 2004. They
are not guarantees of performance or investment results and should not be taken
as investment advice. Investment decisions reflect a variety of factors, and the
managers reserve the right to change their views about individual stocks,
sectors, and the markets at any time. As a result, the views expressed should
not be relied upon as a forecast of the fund's future investment intent. The
report is certified under the Sarbanes-Oxley Act of 2002, which requires mutual
funds and other public companies to affirm that, to the best of their knowledge,
the information in their financial reports is fairly and accurately stated in
all material respects.
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T. Rowe Price Mid-Cap Growth Fund
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Fellow Shareholders
U.S. stocks rallied in the second half of 2004, capping a second consecutive
year of gains. Equities declined through mid-August as economic growth moderated
but revived as oil prices, which had risen steadily, backed away from their
late-October peak. Gains then accelerated following the decisive presidential
election. High-profile corporate deals and mergers late in the year were also
supportive. By year-end, several major indexes were at or near their highest
levels of the year, led by small- and mid-cap shares. The end-of-the-year rally
was in some ways similar to 2003, when speculative stocks--many of them
companies without earnings--led the way. But despite a fourth-quarter growth
rebound, value outperformed growth for the year. Utilities, materials, energy,
and financial stocks were among the mid-cap leaders, while the technology sector
was essentially flat.
Performance Comparison
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Periods Ended 12/31/04 6 Months 12 Months
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Mid-Cap Growth Fund 9.91% 18.39%
Mid-Cap Growth Fund-Advisor Class 9.76 18.12
Mid-Cap Growth Fund-R Class 9.64 17.82
S&P MidCap 400 Index 9.80 16.48
Russell Midcap Growth Index 9.01 15.48
Lipper Mid-Cap Growth Funds Index 8.31 14.03
The Mid-Cap Growth Fund returned 9.91% during the final six months of 2004, in
line with the S&P MidCap 400 Index and well ahead of the aggressive-growth
oriented Russell Midcap Growth Index and our Lipper peer group index, as shown
in the accompanying table. For the year, our 18.39% gain handily beat the S&P,
Russell, and Lipper benchmarks. (Returns for Advisor and R Class shares were
slightly lower, reflecting their higher expense ratios.) The market's renewed
interest in more volatile stocks hampered fund results in November and December,
but for the year, your fund benefited from investors' return to fundamentals
following 2003's speculative rally.
Results relative to competing funds continue to be strong over longer periods.
The fund ranked in the top 12% of the Lipper mid-cap growth funds category for
the three-year period ended December 31, 2004, the top 9% over five years, and
the top 2% over 10 years. (Based on total return, Lipper ranked the Mid-Cap
Growth Fund 73 out of 529, 47 out of 425, 24 out of 282, and 2 out of 109 funds
in the category for the 1-, 3-, 5-, and 10-year periods ended December 31, 2004,
respectively.
Results will vary for other periods, and past performance cannot
guarantee future results.)
Fund rating company Morningstar Inc. recently named your fund's Brian Berghuis
its Domestic Stock Fund Manager of the Year for 2004.* It is gratifying to be
recognized, but as longtime shareholders are aware, this honor really reflects
the hard work of our research team--one of the largest and most respected in the
industry--which is the foundation of our effort. It also reflects the
contributions of portfolio manager John Wakeman, who has worked on the fund for
12 years.
MARKET ENVIRONMENT
The U.S. economy continued to grow at a solid pace in 2004, extending the
recovery that began in 2003. Employment growth, though erratic, began to
improve, particularly in the last few months of the year. Inflation, driven by
record-high oil prices, increased from 1.8% in 2003 to 3.3% in 2004. In this
environment, the Federal Reserve raised short-term interest rates five times
since the end of June, increasing the federal funds rate target from 1.0% to
2.25%--its highest level since November 2001.
Strong GDP growth over the last two years has masked growing imbalances in our
economy. The U.S. budget deficit has ballooned as the increased costs of war
abroad have been accompanied by large increases in outlays for domestic
programs. Since the U.S. savings rate is very low, Americans are now highly
reliant on foreigners to fund our spending, as evidenced by a record current
account deficit. Reflecting these concerns, the U.S. dollar continued to decline
against most major foreign currencies, particularly the euro and the yen, though
China--the source of much of the increase in the trade deficit--has kept the
yuan pegged to the dollar.
The growing economy provided a strong lift to corporate earnings, which grew by
almost 20% in 2004. U.S. stocks posted back-to-back positive years for the first
time since 1998-99, but returns were not as robust as 2003. The S&P 500 stock
index gained nearly 11% in 2004 after surging 29% the previous year, and most of
the increase came after November's presidential election. For the first half of
the year, the markets struggled
*Established in 1988, the Morningstar Fund Manager of the Year award recognizes
portfolio managers who demonstrate excellent investment skill and the courage
to differ from the consensus to benefit investors. To qualify for the award,
managers' funds must have not only posted impressive returns for the year, but
the managers also must have a record of delivering outstanding long-term
performance and of aligning their interests with shareholders'. The Fund
Manager of the Year award winners are chosen based on Morningstar's proprietary
research and in-depth evaluation by its senior analysts.
with rising energy prices, an uneven economic recovery, ongoing terrorism
concerns, and expectations that the Federal Reserve would boost interest rates.
The negative tone of the presidential campaign and fears that the close race
might end in a repeat of 2000's delayed electoral decision also weighed on the
markets. In the end, the Fed's rate hikes were absorbed with little pain, oil
prices eased after reaching highs in late October, and the election produced a
decisive conclusion. The rally that followed was led by small- and mid-cap
stocks, which posted double-digit gains.
Growth vs. Value
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Periods Ended 12/31/04 6 Months 12 Months 3 Years 5 Years
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Russell Midcap Growth Index 9.01% 15.48% 19.64% -15.69%
Russell Midcap Value Index 15.43 23.71 54.32 88.20
Cumulative returns
The stock market's 2004 rise was broad based, extending across all market
capitalizations. Small-cap stocks were the market leaders for the fifth straight
year--the 18.33% return of the small-cap Russell 2000 Index surpassed the 10.88%
return of the large-cap S&P 500. The S&P MidCap 400 rose 16.48%. Value stocks,
which often attract the most attention in uncertain times, outperformed
growth-oriented shares during the year; over the past five years, value has
beaten growth by a wide margin, as the table shows.
PORTFOLIO REVIEW
After a weak first half, technology stocks began to rebound toward the end of
the third quarter and into the fourth. Our Internet and software holdings were
major contributors, led by VeriSign, which successfully integrated a European
acquisition, gaining access to the surprisingly large market for ring tones on
wireless phones, and McAfee, which benefited from the increased focus on
computer security by both commercial and residential customers. The late-year
speculative rally left behind our struggling semiconductor holdings such as
Microchip Technology, Novellus, and Intersil, all major detractors over the past
six months. While the industry has experienced a pause, probably the result of
an inventory correction rather than diminished demand, valuations continue to
look reasonable to us, and we have added to our holdings. IT services also
struggled, but CACI International, a supplier of technology services
primarily to the Department of Defense and other government agencies, was a top
contributor. (Please refer to our portfolio of investments for a complete list
of the fund's holdings and the amount each represents in the portfolio.)
Sector Diversification
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Percent of Percent of
Net Assets Net Assets
Periods Ended 6/30/04 12/31/04
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Information Technology 24.4% 25.1%
Health Care 18.7 19.1
Consumer Discretionary 13.2 14.0
Industrials and Business Services 14.4 13.9
Financials 7.9 9.2
Energy 8.7 6.6
Telecommunication Services 3.0 3.3
Materials 3.2 2.6
Consumer Staples 2.2 1.8
Utilities 0.0 0.0
Other and Reserves 4.3 4.4
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Total 100% 100%
Historical weightings reflect current industry/sector classifications.
The consumer sector also contributed nicely to second-half returns, led by
Garmin, a maker of global positioning system equipment, which experienced strong
demand for its new products, especially vehicle navigation devices. Fairmont
Hotels was another top winner. Fairmont manages (and in some cases owns) some of
the premier luxury hotels in North America. Its stock had lagged somewhat
through 2003 and early 2004, so the recent move was a catch-up rally. We believe
Fairmont is building an enduring brand that can extend its growth to Europe in
the coming years, and we like its long-term prospects.
In past letters, we have discussed the radio industry. We have maintained our
exposure based on our expectation of a recovery in radio advertising, but thus
far the upturn has been tepid. Our attraction to the industry has been based on
the supposition that radio is a reliable, targeted medium that delivers
cost-effective reach to advertisers and high returns to investors based on its
low capital intensity. Radio operators also control valuable spectrum that can
be used either to broadcast additional digital channels or to deliver new
digital services. Valuations seem reasonable, but sales and earnings growth has
stalled. While many observers blame this stagnation on the growth of satellite
radio, the subscriber base in the satellite industry is still relatively small.
Perhaps the growth of Internet advertising,
which can be even more targeted than radio, is biting into sales. Portable
entertainment devices such as iPods may also be siphoning off listeners. We
continue to own radio stocks, such as Citadel Broadcasting, Cox Radio, and
Entercom Communications, and believe their valuations are quite reasonable, but
we are constantly retesting our investment thesis.
The portfolio's cyclical tilt aided performance for both the six months and
year. The materials sector provided good returns for the fund, led by our top
six-month contributor, fertilizer producer Potash Corp./ Saskatchewan. The
company benefited from increased demand and stronger commodity prices.
Steelmaker Nucor was also a stellar stock-price performer, gaining 87% for the
year, as strong demand and high prices for its products pushed sales and
earnings well beyond our wildest expectations. We lightened our positions in
both Potash and Nucor in the fourth quarter as we reduced our cyclical bias.
While we don't believe the economic expansion is over, growth is slowing, and
there is a danger that the economy could be weaker than most people are
expecting due to the lagging effects of rising interest rates and higher energy
prices.
Health care is another area of emphasis, as an aging population combined with
the development of innovative and life-prolonging medicines, procedures, and
services drives demand. Some industries are experiencing short-term headwinds,
however, especially pharmaceutical companies, where a more cautious--perhaps
overly cautious--regulatory environment has taken hold. Our largest exposure is
to health care services, and Omnicare, a provider of pharmacy services to
long-term care facilities, was a major detractor over the past six months. The
stock declined sharply during the third quarter as constraints on government
reimbursement and competition from smaller firms hurt its pricing power. While
concerns remain, the company possesses one of the most seasoned management teams
in the industry, a strong business model, and, in our view, a very reasonable
valuation. We had some health care winners, including Kinetic Concepts, a maker
of wound treatment devices, which was a top-10 contributor for the six months
and year. We also initiated a position in pharmaceutical company Elan, which has
partnered with Biogen Idec on a newly approved and promising multiple sclerosis
drug.
Among our energy holdings, Diamond Offshore Drilling has been a major
contributor this year, despite weakness in the fourth quarter as oil prices
eased. While we have taken advantage of the runup in stock prices to trim our
energy positions from the aggressive approach we had taken a year ago, we still
believe that long-term demand for energy far outweighs supply, and energy ought
to be a cyclically growing sector of the portfolio over the next five years.
INVESTMENT STRATEGY AND OUTLOOK
The economy is slowing somewhat, and continued growth is likely to become
increasingly dependent on spending by businesses rather than by consumers. We
expect Americans to save more as rates creep higher, curbing the momentum
consumers have given the economy during this prolonged period of low interest
rates. At the same time, the housing market is flashing warning signals as
prices have soared to worrisome heights. This frothy real estate market is
likely to moderate at some point, which would also dampen consumer spending.
Several other concerns remain. Although geopolitical worries seemed to fade a
bit toward the end of the year, the war in Iraq and related difficulties around
the world are likely to weigh on sentiment over the longer term. The burgeoning
trade and budget deficits have made the United States overly dependent on
foreign investment. And while inflation seems under control, the stimulative
effects of still low real interest rates and higher energy costs should make
themselves felt eventually.
One other trend bears watching. We are in an era of reregulation as Americans
turn to government to find solutions for homeland security, health care, and
Social Security, to name just a few initiatives. Vilifying corporate America has
become a popular tactic to further political careers and sell newspapers. While
elements of corporate America woefully transgressed during the bubble era, the
backlash of public sentiment is moving us aggressively toward reregulation. One
could view the current environment as a struggle between the forces of 1990s'
corporatism and 1970s' big government. The pendulum is swinging back forcefully
toward government intervention in many aspects of our lives, and it is not clear
where it will, or should, stop. But the long-term implications are significant
for our country and for our markets. Striking the right balance of power between
the public and private sectors will be a key challenge in the years ahead.
In a positive vein, corporate profit margins are high and many businesses are
flush with cash. This liquidity should be a source of economic strength over the
next couple of years as companies regain confidence and begin to reinvest in
their businesses. Producers of capital goods should benefit. This would include
high-technology companies, such as semiconductor manufacturers, as well as
makers of more prosaic, low-tech goods in areas such as industrial
manufacturing. After a long period in which the dollar hindered overseas sales,
the effect of a weaker U.S. currency should also be beneficial.
How the growing cash balances of American companies are deployed will help
determine whether corporate America has learned important lessons in capital
allocation from the painful collapse of the Internet and stock market bubble.
The recent surge in mergers and acquisitions raises the specter that some
companies have not grasped the lesson of the '90s--that most acquisitions fail,
destroying value for shareholders. While some acquisitions are positive, we hope
that management teams will focus on using their healthy balance sheets to
strengthen their businesses by prudent capital investments, repurchasing their
shares opportunistically when conditions warrant, and by returning cash to
shareholders via (now tax-advantaged) dividends.
In past letters, we've touched on the effects of hedge funds. These unregulated
investment pools have grown considerably in recent years. Though the hedge fund
universe consists of numerous investment strategies, many are designed to take
advantage of short-term market inefficiencies. Wall Street analysts have become
increasingly attuned to short-term factors as hedge funds are now a substantial
part of their business. Often we see research that says, to paraphrase, "While
this company is well managed, well positioned, financially secure, and valued
modestly, we see no near-term catalyst." For longer-term investors such as
ourselves--who are willing to look out several years in evaluating
prospects--hearing that a stock "lacks a catalyst" often signals opportunity.
With so many investors focused on the next data point, week, or quarter, a stock
can languish for reasons that aren't relevant to the business's long-term value.
This is not to denigrate hedge funds or short-term investors. They provide
valuable liquidity to the markets, and some of them profit by trading stocks we
own on a short-term basis. But over the long term, our investment philosophy
ought to generate good returns too, not through instant gratification but by
continually adding good companies to our portfolio when they are under duress
from short-term investors. To us, stocks represent actual ownership stakes in
businesses, not simply short-term bets. We think that by focusing on company
fundamentals, seeking strong management teams, paying close attention to
valuations, and maintaining a diversified portfolio, we can achieve solid
results over time.
The fourth quarter marked a return to the kind of market we experienced in 2003,
when more volatile, low-priced stocks--often of unprofitable
companies--prevailed. For most of 2004, however, investors seemed
more risk-aware, and these lower-quality stocks underperformed for the year. The
earnings growth of mid-cap companies has been exceptional, but mid-cap
valuations are now comparable to large-caps. The key to continued mid-cap
outperformance relative to large-caps is relative earnings strength. Growth
stocks outpaced their value counterparts during the fourth quarter, but value
maintains a significant five-year advantage. Because of this performance
disparity, growth stocks appear attractively valued compared to historical
averages. We believe we are well positioned for this environment and for the
long term, as we expect companies with consistent earnings and cash flow growth
to be rewarded.
We appreciate your continued confidence in T. Rowe Price.
Respectfully submitted,
Brian W.H. Berghuis
President of the fund and chairman of its Investment Advisory Committee
John F. Wakeman
Executive vice president of the fund
January 26, 2005
The committee chairman has day-to-day responsibility for managing the portfolio
and works with committee members in developing and executing the fund's
investment program.
RISKS OF STOCK INVESTING
As with all stock and bond mutual funds, the fund's share price can fall because
of weakness in the stock or bond markets, a particular industry, or specific
holdings. The financial markets can decline for many reasons, including adverse
political or economic developments, changes in investor psychology, or heavy
institutional selling. The prospects for an industry or company may deteriorate
because of a variety of factors, including disappointing earnings or changes in
the competitive environment. In addition, the investment manager's assessment of
companies held in a fund may prove incorrect, resulting in losses or poor
performance even in rising markets. The stocks of mid-cap companies entail
greater risk and are usually more volatile than the shares of larger companies.
In addition, growth stocks can be volatile for several reasons. Since they
usually reinvest a high proportion of earnings in their own businesses, they may
lack the dividends usually associated with value stocks that can cushion their
decline in a falling market. Also, since investors buy these stocks because of
their expected superior earnings growth, earnings disappointments often result
in sharp price declines.
GLOSSARY
Lipper indexes: Fund benchmarks that consist of a small number of the largest
mutual funds in a particular category as tracked by Lipper Inc.
S&P 500 Stock Index: An unmanaged index that tracks the stocks of 500 primarily
large-cap U.S. companies.
S&P MidCap 400 Index: An unmanaged index that tracks the stocks of 400 U.S.
mid-cap companies.
Russell Midcap Growth Index: An unmanaged index that measures the performance of
those Russell Midcap companies with higher price-to-book ratios and higher
forecasted growth values.
Russell Midcap Value Index: An unmanaged index that measures the performance of
those Russell Midcap companies with lower price-to-book ratios and lower
forecasted growth values.
T. Rowe Price Mid-Cap Growth Fund
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Portfolio Highlights
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
12/31/04
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ChoicePoint 1.4%
MedImmune 1.4
Omnicare 1.3
Harris 1.3
Rockwell Collins 1.3
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Roper Industries 1.2
Brunswick 1.2
McAfee 1.2
BJ Services 1.1
DST Systems 1.1
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VeriSign 1.1
Alliant Techsystems 1.1
Manor Care 1.1
Potash Corp./Saskatchewan 1.1
Fairmont Hotels 1.0
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Murphy Oil 1.0
Laboratory Corporation of America 1.0
Manpower 1.0
Certegy 1.0
Kinetic Concepts 1.0
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Citadel Broadcasting 1.0
PETsMART 1.0
Smith International 0.9
Assurant 0.9
Family Dollar Stores 0.9
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Total 27.6%
Note: Table includes investments in the T. Rowe Price Government Reserve Fund.
T. Rowe Price Mid-Cap Growth Fund
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Portfolio Highlights
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CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended 12/31/04
Best Contributors
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Potash Corp./Saskatchewan 30(cents)
McAfee 27
VeriSign 25
NAVTEQ * 21
Diamond Offshore Drilling 19
Kinetic Concepts 19
Garmin 16
CACI International 13
Nucor 12
Fairmont Hotels 12
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Total 194(cents)
Worst Contributors
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Omnicare -17(cents)
ImClone Systems -11
Cott -9
Red Hat -9
Ceridian ** -8
Intersil Holding -8
IVAX -7
Agere Systems ** -7
Microchip Technology -6
Andrx -5
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Total -87(cents)
12 Months Ended 12/31/04
Best Contributors
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Potash Corp./Saskatchewan 35(cents)
McAfee 35
VeriSign 34
Kinetic Concepts * 29
Nucor 27
Harris 26
Diamond Offshore Drilling 24
Brunswick 23
NAVTEQ* 21
Research In Motion ** 19
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Total 273(cents)
Worst Contributors
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Agere Systems ** -15(cents)
Intersil Holding -12
Omnicare -11
Watson Pharmaceuticals ** -10
Cox Radio -9
Citadel Broadcasting -9
Microchip Technology -8
Novellus Systems -8
IVAX -7
Cadence Design Systems -7
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Total -96(cents)
* Position added
** Position eliminated
T. Rowe Price Mid-Cap Growth Fund
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Growth of $10,000
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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 benchmarks, which may include a
broad-based market index and 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.
[GRAPHIC OMITTED]
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Mid-Cap Growth Fund
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As of 12/31/04
Mid-Cap Growth Fund $ 43,116
S&P MidCap 400 Index $ 44,495
Lipper Mid-Cap Growth Funds Index $ 25,193
S&P MidCap Lipper Mid-Cap Mid-Cap
400 Index Growth Funds Index Growth Fund
12/94 10,000 10,000 10,000
12/95 13,095 13,921 14,095
12/96 15,609 15,794 17,596
12/97 20,644 17,585 20,822
12/98 24,589 19,834 25,402
12/99 28,209 34,456 31,443
12/00 33,148 28,897 33,778
12/01 32,947 22,809 33,447
12/02 28,166 16,315 26,350
12/03 38,198 22,093 36,419
12/04 44,495 25,193 43,116
Note: Performance for the Advisor and R Class shares will vary due to their
differing fee structure. See returns table on the next page.
T. Rowe Price Mid-Cap Growth Fund
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Average Annual Compound Total Return
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This table shows how the fund and its benchmarks would have performed if their
actual (or cumulative) returns for the periods shown had been earned at a
constant rate.
Since Inception
Periods Ended 12/31/04 1 Year 5 Years 10 Years Inception Date
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Mid-Cap Growth Fund 18.39% 6.52% 15.73% - -
S&P MidCap 400 Index 16.48 9.54 16.10 - -
Russell Midcap Growth Index 15.48 -3.36 11.23 - -
Lipper Mid-Cap Growth
Funds Index 14.03 -6.07 9.68 - -
Mid-Cap Growth Fund-
Advisor Class 18.12 - - 4.58% 3/31/00
Mid-Cap Growth Fund-R Class 17.82 - - 28.42 9/30/02
S&P MidCap 400 Index 16.48 - - 25.64 -
Russell Midcap Growth Index 15.48 - - 29.80 -
Lipper Mid-Cap Growth
Funds Index 14.03 - - 23.80 -
Current performance may be higher or lower than the quoted past performance,
which cannot guarantee future results. Share price, principal value, and return
will vary, and you may have a gain or loss when you sell your shares. For the
most recent month-end performance information, please visit our Web site
(troweprice.com) or contact a T. Rowe Price representative at 1-800-225-5132.
Average annual total return figures include changes in principal value,
reinvested dividends, and capital gain distributions. Returns do not reflect
taxes that the shareholder may pay on fund distributions or the redemption of
fund shares. When assessing performance, investors should consider both short-
and long-term returns.
T. Rowe Price Mid-Cap Growth Fund
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Fund Expense Example
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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.
Please note that the fund has three share classes: The original share class
("investor class") charges no distribution and service (12b-1) fee; Advisor
Class shares are offered only through unaffiliated brokers and other financial
intermediaries and charge a 0.25% 12b-1 fee; R Class shares are available to
retirement plans serviced by intermediaries and charge a 0.50% 12b-1 fee. Each
share class is presented separately in the table.
Actual Expenses
The first line of the following table ("Actual") provides information about
actual account values and expenses based on the fund's actual returns. You may
use the information in 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 in 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 the fund with
other funds by contrasting this 5% hypothetical example and the 5% hypothetical
examples that appear in the shareholder reports of the other funds. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period.
Note: T. Rowe Price charges an annual small-account maintenance fee of $10,
generally for accounts with less than $2,000 ($500 for UGMA/UTMA). The fee is
waived for any investor whose T. Rowe Price mutual fund accounts total $25,000
or more, accounts employing automatic investing, and IRAs and other retirement
plan accounts that utilize a prototype plan sponsored by T. Rowe Price (although
a separate custodial or administrative fee may apply to such accounts). This fee
is not included in the accompanying table. If you are subject to the fee, keep
it in mind when you are estimating the ongoing expenses of investing in the fund
and when comparing the expenses of this fund with other funds.
You should also be aware that the expenses shown in the table highlight only
your ongoing costs and do not reflect any transaction costs, such as redemption
fees or sales loads. Therefore, the second line of the table is useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. To the extent a fund charges transaction costs,
however, the total cost of owning that fund is higher.
T. Rowe Price Mid-Cap Growth Fund
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Beginning Ending Expenses Paid
Account Value Account Value During Period*
7/1/04 12/31/04 7/1/04 to 12/31/04
- --------------------------------------------------------------------------------
Investor Class
Actual $1,000.00 $1,099.10 $4.38
Hypothetical (assumes 5%
return before expenses) 1,000.00 1,020.96 4.22
Advisor Class
Actual 1,000.00 1,097.60 5.59
Hypothetical (assumes 5%
return before expenses) 1,000.00 1,019.81 5.38
R Class
Actual 1,000.00 1,096.40 6.80
Hypothetical (assumes 5%
return before expenses) 1,000.00 1,018.65 6.55
*Expenses are equal to the fund's annualized expense ratio for the six-month
period, multiplied by the average account value over the period, multiplied by
the number of days in the most recent fiscal half year (184) divided by the
days in the year (366) to reflect the half-year period. The annualized expense
ratio of the investor class was 0.83%, the Advisor Class was 1.06%, and the R
Class was 1.29%.
T. Rowe Price Mid-Cap Growth Fund
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Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Investor Class
Year
Ended
12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
NET ASSET VALUE
Beginning of period $ 42.90 $ 31.04 $ 39.40 $ 39.79 $ 40.13
Investment activities
Net investment income (loss) (0.17) (0.14) (0.17) (0.13) (0.03)
Net realized and
unrealized gain (loss) 8.05 12.00 (8.19) (0.26) 2.96
Total from
investment activities 7.88 11.86 (8.36) (0.39) 2.93
Distributions
Net realized gain (0.90) - - - (3.27)
NET ASSET VALUE
End of period $ 49.88 $ 42.90 $ 31.04 $ 39.40 $ 39.79
------------------------------------------------
Ratios/Supplemental Data
Total return^ 18.39% 38.21% (21.22)% (0.98)% 7.43%
Ratio of total expenses to
average net assets 0.83% 0.87% 0.88% 0.89% 0.86%
Ratio of net investment
income (loss) to average
net assets (0.39)% (0.44)% (0.50)% (0.35)% (0.09)%
Portfolio turnover rate 29.6% 30.2% 36.0% 43.0% 53.6%
Net assets, end of period
(in millions) $12,664 $ 9,874 $ 5,713 $ 6,739 $ 6,589
^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.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Advisor Class
Year 3/31/00
Ended Through
12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
NET ASSET VALUE
Beginning of period $ 42.66 $ 30.94 $ 39.39 $ 39.83 $ 44.13
Investment activities
Net investment income (loss) (0.26) (0.17) (0.12)* (0.08) 0.01**
Net realized and
unrealized gain (loss) 7.98 11.89 (8.33) (0.36) (1.04)
Total from
investment activities 7.72 11.72 (8.45) (0.44) (1.03)
Distributions
Net realized gain (0.90) - - - (3.27)
NET ASSET VALUE
End of period $ 49.48 $ 42.66 $ 30.94 $ 39.39 $ 39.83
-------------------------------------------------
Ratios/Supplemental Data
Total return^ 18.12% 37.88% (21.45)%* (1.10)% (2.22)%
Ratio of total expenses to
average net assets 1.07% 1.09% 1.10%* 1.04% 0.70%!
Ratio of net investment
income (loss) to average
net assets (0.62)% (0.64)% (0.69)%* (0.56)% 0.09%!
Portfolio turnover rate 29.6% 30.2% 36.0% 43.0% 53.6%
Net assets, end of period
(in thousands) $403,544 $283,115 $ 50,640 $ 16,736 $ 2,303
* Excludes expenses in excess of a 1.10% contractual expense limitation in
effect through 4/30/06.
** 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
- --------------------------------------------------------------------------------
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
R Class
Year 9/30/02
Ended Through
12/31/04 12/31/03 12/31/02
NET ASSET VALUE
Beginning of period $ 42.65 $ 31.01 $ 28.61
Investment activities
Net investment income (loss) (0.41) (0.18) (0.07)*
Net realized and unrealized
gain (loss) 8.00 11.82 2.47**
Total from investment
activities 7.59 11.64 2.40
Distributions
Net realized gain (0.90) - -
NET ASSET VALUE
End of period $ 49.34 $ 42.65 $ 31.01
-----------------------------------------------
Ratios/Supplemental Data
Total return^ 17.82% 37.54% 8.39%*
Ratio of total expenses to
average net assets 1.31% 1.30% 1.40%!*
Ratio of net investment
income (loss) to average
net assets (0.86)% (0.79)% (0.88%)!*
Portfolio turnover rate 29.6% 30.2% 36.0%
Net assets, end of period
(in thousands) $ 152,380 $ 63,210 $ 108
* Excludes expenses in excess of a 1.40% contractual expense limitation in
effect through 4/30/06.
** 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
- --------------------------------------------------------------------------------
December 31, 2004
Portfolio of Investments (1) Shares/$ Par Value
- --------------------------------------------------------------------------------
(Cost and value in $ 000s)
COMMON STOCKS 95.6%
CONSUMER DISCRETIONARY 14.0%
Auto Components 0.9%
Gentex 3,250,000 120,315
120,315
Hotels, Restaurants & Leisure 2.1%
Fairmont Hotels ! 4,000,000 138,560
PF Chang's China Bistro * 1,000,000 56,350
The Cheesecake Factory * 2,625,000 85,234
280,144
Household Durables 0.8%
Garmin 1,750,000 106,470
106,470
Leisure Equipment & Products 1.2%
Brunswick 3,200,000 158,400
158,400
Media 4.3%
Catalina Marketing ! 1,950,000 57,779
Citadel Broadcasting *! 8,000,000 129,440
Cox Radio, Class A * 2,600,000 42,848
Entercom Communications * 2,050,000 73,574
Getty Images * 500,000 34,425
Rogers Communications, Class B 4,250,000 111,137
Scholastic * 1,700,000 62,832
XM Satellite Radio Holdings, Class A * 1,400,000 52,668
564,703
Multiline Retail 1.2%
Dollar Tree Stores * 1,500,000 43,020
Family Dollar Stores 3,900,000 121,797
164,817
Specialty Retail 3.5%
Best Buy 1,750,000 103,985
O'Reilly Automotive * 1,600,000 72,080
PETsMART 3,600,000 127,908
Ross Stores 3,000,000 86,610
Williams-Sonoma * 2,000,000 70,080
460,663
Total Consumer Discretionary 1,855,512
CONSUMER STAPLES 1.8%
Beverages 0.6%
Cott * 3,400,000 84,082
84,082
Food & Staples Retailing 1.2%
Shoppers Drug Mart (CAD) * 1,600,000 49,565
Whole Foods Market 1,100,000 104,885
154,450
Total Consumer Staples 238,532
ENERGY 6.6%
Energy Equipment & Services 3.5%
BJ Services 3,250,000 151,255
Diamond Offshore Drilling 2,500,000 100,125
FMC Technologies * 2,850,000 91,770
Smith International * 2,250,000 122,423
465,573
Oil & Gas 3.1%
EOG Resources 1,300,000 92,768
Murphy Oil 1,700,000 136,765
Western Gas Resources 2,400,000 70,200
XTO Energy 3,200,000 113,216
412,949
Total Energy 878,522
FINANCIALS 9.2%
Capital Markets 3.9%
AmeriTrade * 8,100,000 115,182
Eaton Vance 2,000,000 104,300
Federated Investors, Class B 1,500,000 45,600
Investors Financial Services 1,100,000 54,978
Legg Mason 1,200,000 87,912
Waddell & Reed Financial, Class A ! 4,225,000 100,935
508,907
Commercial Banks 0.2%
Silicon Valley Bancshares * 600,000 26,892
26,892
Consumer Finance 0.7%
Moneygram International 4,300,000 90,902
90,902
Diversified Financial Services 1.3%
CapitalSource * 3,500,000 89,845
Principal Financial Group 2,100,000 85,974
175,819
Insurance 2.6%
Assurant 4,000,000 122,200
Axis Capital Holdings 2,000,000 54,720
Protective Life 1,600,000 68,304
Willis Group Holdings 2,250,000 92,633
337,857
Thrifts & Mortgage Finance 0.5%
Radian 1,300,000 69,212
69,212
Total Financials 1,209,589
HEALTH CARE 19.1%
Biotechnology 5.8%
Abgenix * 2,250,000 23,265
Alkermes * 2,250,000 31,703
Amylin Pharmaceuticals * 1,400,000 32,704
Cephalon * 2,250,000 114,480
Eyetech Pharmaceuticals * 1,000,000 45,500
Gen-Probe * 950,000 42,949
Gilead Sciences * 3,300,000 115,467
Human Genome Sciences * 2,300,000 27,646
ImClone Systems * 650,000 29,952
MedImmune * 6,800,000 184,348
Neurocrine Biosciences * 1,250,000 61,625
Protein Design Labs * 1,750,000 36,155
Vertex Pharmaceuticals * 2,200,000 23,254
769,048
Health Care Equipment & Supplies 3.2%
Bausch & Lomb 500,000 32,230
Edwards Lifesciences * 1,950,000 80,457
INAMED * 400,000 25,300
Invitrogen * 950,000 63,774
Kinetic Concepts * 1,700,000 129,710
Varian Medical Systems * 600,000 25,944
Waters Corporation * 1,400,000 65,506
422,921
Health Care Providers & Services 6.1%
AmerisourceBergen 1,700,000 99,756
Community Health System * 2,300,000 64,124
Coventry Health Care * 1,000,000 53,080
Davita * 1,000,000 39,530
Health Management, Class A 4,500,000 102,240
Laboratory Corporation of America * 2,700,000 134,514
Manor Care 4,000,000 141,720
Omnicare 5,000,000 173,100
808,064
Pharmaceuticals 4.0%
Andrx * 2,352,100 51,346
Barr Pharmaceuticals * 2,500,000 113,850
Elan ADR * 3,300,000 89,925
IVAX * 5,500,000 87,010
Sepracor * 886,000 52,602
Taro Pharmaceuticals * 1,204,200 40,979
Valeant Pharmaceuticals 3,200,000 84,320
520,032
Total Health Care 2,520,065
INDUSTRIALS & BUSINESS SERVICES 13.9%
Aerospace & Defense 2.4%
Alliant Techsystems *! 2,250,000 147,105
Rockwell Collins 4,200,000 165,648
312,753
Air Freight & Logistics 1.0%
C.H. Robinson Worldwide 1,350,000 74,952
Expeditors International of Washington 1,000,000 55,880
130,832
Airlines 1.3%
JetBlue Airways * 3,100,000 71,982
Southwest Airlines 6,000,000 97,680
169,662
Building Products 0.7%
American Standard * 2,400,000 99,168
99,168
Commercial Services & Supplies 4.1%
Apollo Group, Class A * 600,000 48,426
ChoicePoint * 4,100,000 188,559
Education Management * 2,300,000 75,923
Manpower 2,750,000 132,825
Robert Half International 2,200,000 64,746
Viad ! 1,250,000 35,612
546,091
Industrial Conglomerates 1.8%
Roper Industries ! 2,700,000 164,079
Teleflex 1,361,300 70,706
234,785
Machinery 2.5%
Danaher 1,900,000 109,079
ITT Industries 1,300,000 109,785
Oshkosh Truck 1,600,000 109,408
328,272
Trading Companies & Distributors 0.1%
MSC Industrial Direct, Class A 550,000 19,789
19,789
Total Industrials & Business Services 1,841,352
INFORMATION TECHNOLOGY 25.1%
Communications Equipment 2.3%
ADTRAN 1,800,000 34,452
Comverse Technology * 2,000,000 48,900
Harris 2,700,000 166,833
Juniper Networks * 2,000,000 54,380
304,565
Computers & Peripherals 1.5%
Diebold 1,700,000 94,741
Lexmark International, Class A * 250,000 21,250
QLogic * 2,250,000 82,643
198,634
Electronic Equipment & Instruments 2.7%
CDW 1,650,000 109,478
Flextronics * 6,300,000 87,066
FLIR Systems * 1,275,000 81,332
Jabil Circuit * 3,400,000 86,972
364,848
Internet Software & Services 2.6%
CNET Networks * 5,400,000 60,642
IAC/InterActiveCorp * 1,750,000 48,335
Monster Worldwide * 2,702,600 90,915
VeriSign * 4,400,000 147,488
347,380
IT Services 6.4%
CACI International, Class A * 1,200,000 81,756
Certegy ! 3,700,000 131,461
Checkfree * 2,300,000 87,584
DST Systems * 2,900,000 151,148
Fiserv * 1,700,000 68,323
Global Payments 1,500,000 87,810
Hewitt Associates, Class A *! 2,000,000 64,020
Iron Mountain * 3,900,000 118,911
SunGard Data Systems * 1,800,000 50,994
842,007
Semiconductor & Semiconductor Equipment 4.2%
AMIS Holdings * 2,900,000 47,908
Integrated Circuit Systems * 2,500,000 52,300
Intersil Holding, Class A 5,000,000 83,700
Microchip Technology 3,500,000 93,310
Novellus Systems * 3,250,000 90,642
PMC-Sierra * 4,000,000 45,000
Semtech * 2,300,000 50,301
Xilinx 3,100,000 91,915
555,076
Software 5.4%
Adobe Systems 1,000,000 62,740
Cadence Design Systems * 7,250,000 100,122
Citrix Systems * 750,000 18,398
Cognos * 750,000 33,045
Intuit * 800,000 35,208
Jack Henry & Associates 2,600,000 51,766
McAfee * 5,300,000 153,329
Mercury Interactive * 1,700,000 77,435
NAVTEQ * 2,402,400 111,375
Red Hat * 3,750,000 50,063
VERITAS Software * 600,000 17,130
710,611
Total Information Technology 3,323,121
MATERIALS 2.6%
Chemicals 1.1%
Potash Corp./Saskatchewan 1,700,000 141,202
141,202
Metals & Mining 1.5%
Newmont Mining 2,000,000 88,820
Nucor 2,100,000 109,914
198,734
Total Materials 339,936
TELECOMMUNICATION SERVICES 3.3%
Diversified Telecommunication Services 0.6%
Telus (CAD) 2,600,000 78,274
78,274
Wireless Telecommunication Services 2.7%
Crown Castle International * 5,800,000 96,512
Nextel Communications, Class A * 1,750,000 52,500
Nextel Partners, Class A * 5,100,000 99,654
Western Wireless, Class A * 3,500,000 102,550
351,216
Total Telecommunication Services 429,490
Total Common Stocks (Cost $8,712,105) 12,636,119
SHORT-TERM INVESTMENTS 4.3%
Money Market Fund 4.3%
T. Rowe Price Government Reserve
Investment Fund, 1.85% #! 564,708,628 564,709
564,709
Tax-Exempt Comercial Paper 0.0%
Alliance & Leicester, 2.40%, 2/14/05 900,000 897
897
Total Short-Term Investments (Cost $565,606) 565,606
Total Investments in Securities
99.9% of Net Assets (Cost $9,277,711) $13,201,725
-----------
(1) Denominated in U.S. dollars unless otherwise noted
# Seven-day yield
* Non-income producing
ADR American Depository Receipts
CAD Canadian dollar
!Affiliated Companies
($000s)
The fund may invest in certain securities that are considered affiliated
companies. As defined by the 1940 Act, and affiliated company is one in which
the fund owns 5% or more of the outstanding voting securities, or a company
which is under common ownership or control.
Purchase Sales Investment Value
Affiliate Cost Cost Income 12/31/04 12/31/03
- -------------------------------------------------------------------------------
Alliant Techsystems $19,926 $ - $ - $ 147,105 $ *
Catalina Marketing - 35,207 585 57,779 65,520
Certegy 20,236 - 710 131,461 *
Citadel Broadcasting 78,121 - - 129,440 *
Fairmont Hotels 25,533 - 388 138,560 *
Hewitt Associates 8,950 26,467 - 64,020 81,029
Roper Industries 27,064 - 866 164,079 110,835
Viad 14,505 - 784 35,612 *
Waddell & Reed Financial - - 2,535 100,935 99,119
T. Rowe Price Government
Reserve Investment Fund ** ** 7,850 564,709 657,953
Totals $ 13,718 $1,533,700 $1,014,456
--------------------------------
* The issuer was not considered an affiliated company at December 31, 2003.
*** Purchase and sale information not shown for cash management funds.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
December 31, 2004
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
(In thousands except shares and per share amounts)
Assets
Investments in securities, at value
Affiliated companies (cost $1,313,274) $ 1,533,700
Non-affiliated companies (cost $7,964,437) 11,668,025
Total investments in securities 13,201,725
Other assets 40,957
Total assets 13,242,682
Liabilities
Total liabilities 23,172
NET ASSETS $ 13,219,510
---------------
Net Assets Consist of:
Undistributed net realized gain (loss) $ 44,433
Net unrealized gain (loss) 3,924,164
Paid-in-capital applicable to 265,140,886 shares of
$0.01 par value capital stock outstanding;
1,000,000,000 shares authorized 9,250,913
NET ASSETS $ 13,219,510
---------------
NET ASSET VALUE PER SHARE
Investor Class
($12,663,585,485/253,896,490 shares outstanding) $ 49.88
---------------
Advisor Class
($403,544,389/8,155,882 shares outstanding) $ 49.48
---------------
R Class
($152,380,489/3,088,514 shares outstanding) $ 49.34
---------------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
($ 000s)
Year
Ended
12/31/04
Investment Income (Loss)
Income
Dividend $ 50,590
Interest 2
Total income 50,592
Expenses
Investment management 75,642
Shareholder servicing
Investor Class 16,889
Advisor Class 424
R Class 161
Rule 12b-1 fees
Advisor Class 841
R Class 592
Prospectus and shareholder reports
Investor Class 905
Advisor Class 62
R Class 14
Custody and accounting 408
Registration 323
Legal and audit 42
Directors 21
Miscellaneous 97
Total expenses 96,421
Expenses paid indirectly (9)
Net expenses 96,412
Net investment income (loss) (45,820)
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
($ 000s)
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Affiliated securities (6,414)
Non-affiliated securities 594,168
Foreign currency transactions 69
Net realized gain (loss) 587,823
Change in net unrealized gain (loss)
Securities 1,458,103
Other assets and liabilities denominated
in foreign currencies 8
Change in net unrealized gain (loss) 1,458,111
Net realized and unrealized gain (loss) 2,045,934
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 2,000,114
--------------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
($ 000s)
Year
Ended
12/31/04 12/31/03
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ (45,820) $ (33,579)
Net realized gain (loss) 587,823 409,977
Change in net unrealized gain (loss) 1,458,111 2,138,805
Increase (decrease) in net
assets from operations 2,000,114 2,515,203
Distributions to shareholders
Net realized gain
Investor Class (223,885) -
Advisor Class (7,201) -
R Class (2,753) -
Decrease in net assets from distributions (233,839) -
Capital share transactions *
Shares sold
Investor Class 2,905,566 3,146,458
Advisor Class 160,530 216,462
R Class 92,703 65,652
Distributions reinvested
Investor Class 213,442 -
Advisor Class 6,682 -
R Class 2,751 -
Shares redeemed
Investor Class (2,025,940) (1,448,331)
Advisor Class (98,781) (31,450)
R Class (24,403) (7,109)
Increase (decrease) in net assets from
capital share transactions 1,232,550 1,941,682
Net Assets
Increase (decrease) during period 2,998,825 4,456,885
Beginning of period 10,220,685 5,763,800
End of period $13,219,510 $10,220,685
----------- -----------
(Including undistributed net investment income
of $0 at 12/31/04 and $0 at 12/31/03)
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
($ 000s)
Year
Ended
12/31/04 12/31/03
*Share information
Shares sold
Investor Class 64,513 86,068
Advisor Class 3,595 5,843
R Class 2,093 1,655
Distributions reinvested
Investor Class 4,323 -
Advisor Class 136 -
R Class 56 -
Shares redeemed
Investor Class (45,103) (39,948)
Advisor Class (2,211) (844)
R Class (542) (176)
Increase (decrease) in shares outstanding 26,860 52,598
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
December 31, 2004
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: the Mid-Cap Growth Fund
original share class, referred to in this report as the Investor 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 sold only through unaffiliated
brokers and other unaffiliated financial intermediaries, and R Class shares are
available to 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,
shareholder servicing, and/or 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
The fund values its investments and computes its net asset value per share 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, for certain markets, the official closing price at
the time the valuations are made, except for OTC Bulletin Board securities,
which are valued at the mean of the latest bid and asked prices. 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 asked prices for domestic securities and the last quoted sale price for
international securities.
Debt securities with original maturities of less than one year are valued at
amortized cost in local currency, which approximates fair value when combined
with accrued interest.
Investments in mutual funds are valued at the mutual fund's closing net asset
value per share on the day of valuation.
Other investments, including restricted securities, 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 the T. Rowe Price
Valuation Committee, established by the fund's Board of Directors.
Most foreign markets close before the close of trading on the NYSE. If the fund
determines that developments between the close of a foreign market and the close
of the NYSE will, in its judgment, materially affect the value of some or all of
its portfolio securities, which in turn will affect the fund's share price, the
fund will adjust the previous closing prices to reflect the fair value of the
securities as of the close of the NYSE, as determined in good faith by the T.
Rowe Price Valuation Committee, established by the fund's Board of Directors. A
fund may also fair value securities in other situations, such as when a
particular foreign market is closed but the fund is open. In deciding whether to
make fair value adjustments, the fund reviews a variety of factors, including
developments in foreign markets, the performance of U.S. securities markets, and
the performance of instruments trading in U. S. markets that represent foreign
securities and baskets of foreign securities. The fund uses outside pricing
services to provide it with closing market prices and information used for
adjusting those prices. The fund cannot predict how often it will use closing
prices and how often it will adjust those prices. As a means of evaluating its
fair value process, the fund routinely compares closing market prices, the next
day's opening prices in the same markets, and adjusted prices.
Currency Translation
Assets, including investments, and liabilities denominated in foreign currencies
are translated into U.S. dollar values each day at the prevailing exchange rate,
using the mean of the bid and asked prices of such currencies against U.S.
dollars as quoted by a major bank. Purchases and sales of securities, income,
and expenses are translated into U.S. dollars at the prevailing exchange rate on
the date of the transaction. The effect of changes in foreign currency exchange
rates on realized and unrealized security gains and losses is reflected as a
component of security gains and losses.
Class Accounting
The Advisor Class and R Class each pay distribution, shareholder servicing,
and/or certain 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 daily
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.
Rebates and Credits
Subject to best execution, the fund may direct certain security trades to
brokers who have agreed to rebate a portion of the related brokerage commission
to the fund in cash. Commission rebates are included in realized gain on
securities in the accompanying financial statements and totaled $861,000 for the
year ended December 31, 2004. Additionally, the fund earns credits on
temporarily uninvested cash balances at the custodian that reduce the fund's
custody charges. Custody expense in the accompanying financial statements is
presented before reduction for credits, which are reflected as expenses paid
indirectly.
Investment Transactions, Investment Income, and Distributions
Income and expenses are recorded on the accrual basis. Premiums and discounts on
debt securities are amortized for financial reporting purposes. Dividends
received from mutual fund investments are reflected as dividend income; capital
gain distributions are reflected as realized gain/loss. Dividend income and
capital gain distributions are recorded on the ex-dividend date. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Distributions to shareholders are
recorded on the ex-dividend date. 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.
Other
In the normal course of business, the fund enters into contracts that provide
general indemnifications. The fund's maximum exposure under these arrangements
is dependent on claims that may be made against the fund in the future and,
therefore, cannot be estimated; however, based on experience, the risk of
material loss from such claims is considered remote.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $4,175,702,000 and $3,206,278,000, respectively, for the year ended
December 31, 2004.
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 under Subchapter M of the
Internal Revenue Code 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 significantly 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. Financial records are not adjusted for temporary differences.
Distributions during the year ended December 31, 2004 totaled $233,839,000 and
were characterized as long-term capital gain for tax purposes. At December 31,
2004, the tax-basis components of net assets were as follows:
- --------------------------------------------------------------------------------
Unrealized appreciation $ 4,105,823,000
Unrealized depreciation (181,659,000)
Net unrealized appreciation (depreciation) 3,924,164,000
Undistributed ordinary income 1,544,000
Undistributed long-term capital gain 42,889,000
Paid-in capital 9,250,913,000
Net assets $ 13,219,510,000
----------------
The fund intends to retain realized gains to the extent of available capital
loss carryforwards for federal income tax purposes. During the year ended
December 31, 2004, the fund utilized $258,934,000 of capital loss carryforwards.
For the year ended December 31, 2004, the fund recorded the following permanent
reclassifications to reflect tax character. Reclassifications to paid-in capital
relate primarily to a tax practice that treats a portion of the proceeds from
each redemption of capital shares as a distribution of taxable net investment
income and/or realized capital gain. Reclassifications between income and gain
relate primarily to the offset of the current net operating loss against
realized gains. Results of operations and net assets were not affected by these
reclassifications.
- --------------------------------------------------------------------------------
Undistributed net investment income $ 45,820,000
Undistributed net realized gain (50,440,000)
Paid-in capital 4,620,000
At December 31, 2004, the cost of investments for federal income tax purposes
was $9,277,711,000.
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 average daily net assets to those of the group. At December 31,
2004, the effective annual group fee rate was 0.31%, and investment management
fee payable totaled $7,272,000.
The Advisor Class and R Class are also subject to a contractual expense
limitation through the limitation dates indicated in the table below. During the
limitation period, the manager is required to waive its management fee and
reimburse a class for any expenses, excluding interest, taxes, brokerage
commissions, and extraordinary expenses, that would otherwise cause the class's
ratio of total expenses to average net assets (expense ratio) to exceed its
expense limitation. Through the repayment date, each class is required to repay
the manager for expenses previously reimbursed and management fees waived to the
extent the class's net assets have grown or expenses have declined sufficiently
to allow repayment without causing the class's expense ratio to exceed its
expense limitation.
- --------------------------------------------------------------------------------
Advisor Class R Class
Expense Limitation 1.10% 1.40%
Limitation Date 4/30/06 4/30/06
Repayment Date 4/30/08 4/30/08
Pursuant to this agreement, at December 31, 2004, there were no amounts subject
to repayment. For the year ended December 31, 2004, each class operated below
its expense limitation.
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 the Investor Class and R Class. For the year ended December 31,
2004, expenses incurred pursuant to these service agreements were $82,000 for
Price Associates, $3,388,000 for T. Rowe Price Services, Inc., and $6,986,000
for T. Rowe Price Retirement Plan Services, Inc. At period-end, a total of
$952,000 of these expenses was payable.
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 year ended December 31,
2004, the fund was charged $66,000 for shareholder servicing costs related to
the college savings plans, of which $46,000 was for services provided by Price
and $7,000 was payable at period-end. At December 31, 2004, approximately 0.3%
of the outstanding shares of the Investor 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 a special
servicing agreement, 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 this agreement are reflected as
shareholder servicing expense in the accompanying financial statements. For the
year ended December 31, 2004, the fund was allocated $313,000 of Retirement
Funds' expenses, of which $217,000 related to services provided by Price and
$29,000 was payable at period-end. At December 31, 2004, approximately 1.1% of
the outstanding shares of the Investor Class were held by the Retirement Funds.
The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe
Price Government Reserve Investment Fund (collectively, the Reserve Funds),
open-end management investment companies managed by Price Associates and
affiliates of the fund. The Reserve Funds are offered as cash management options
to mutual funds, trusts, and other accounts managed by Price Associates and/or
its affiliates, and are not available for direct purchase by members of the
public. The Reserve Funds pay no investment management fees.
As of December 31, 2004, T. Rowe Price Group, Inc. and/or its wholly owned
subsidiaries owned 82,736 shares of the Investor Class, representing less than
1% of the fund's net assets.
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
Report of Independent Registered Public Accounting Firm
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
T. Rowe Price Mid-Cap Growth Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of T. Rowe Price Mid-Cap Growth Fund,
Inc. (the "Fund") at December 31, 2004, and the results of its operations, the
changes in its net assets and the financial highlights for each of the fiscal
periods presented, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (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 the auditing standards
of the Public Company Accounting Oversight Board (United States). Those
standards 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, 2004 by
correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 11, 2005
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
Tax Information (Unaudited) for the Tax Year Ended 12/31/04
- --------------------------------------------------------------------------------
We are providing this information as required by the Internal Revenue Code. The
amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
The fund's distributions to shareholders included:
o $26,000 from short-term capital gains,
o $238,432,000 from long-term capital gains, subject to the 15% rate gains
category.
For taxable non-corporate shareholders, $1,570,000 of the fund's income
represents qualified dividend income subject to the 15% rate category.
For corporate shareholders, $1,570,000 of the fund's income qualifies for the
dividends-received deduction.
Information on Proxy Voting Policies, Procedures, and Records
- --------------------------------------------------------------------------------
A description of the policies and procedures used by T. Rowe Price funds and
portfolios to determine how to vote proxies relating to portfolio securities is
available in each fund's Statement of Additional Information, which you may
request by calling 1-800-225-5132 or by accessing the SEC's Web site,
www.sec.gov. The description of our proxy voting policies and procedures is also
available on our Web site, www.troweprice.com. To access it, click on the words
"Company Info" at the top of our homepage for individual investors. Then, in the
window that appears, click on the "Proxy Voting Policy" navigation button in the
top left corner.
Each fund's most recent annual proxy voting record is available on our Web site
and through the SEC's Web site. To access it through our Web site, follow the
directions above, then click on the words "Proxy Voting Record" at the bottom of
the Proxy Voting Policy page.
How to Obtain Quarterly Portfolio Holdings
- --------------------------------------------------------------------------------
The fund files a complete schedule of portfolio holdings with the Securities and
Exchange Commission for the first and third quarters of each fiscal year on Form
N-Q. The fund's Form N-Q is available electronically on the SEC's Web site
(www.sec.gov); hard copies may be reviewed and copied at the SEC's Public
Reference Room, 450 Fifth St. N.W., Washington, DC 20549. For more information
on the Public Reference Room, call 1-800-SEC-0330.
T. Rowe Price Mid-Cap Growth Fund
- --------------------------------------------------------------------------------
About the Fund's Directors and Officers
- --------------------------------------------------------------------------------
Your fund is governed by a Board of Directors that meets regularly to review
investments, performance, compliance matters, advisory fees, expenses, and other
business affairs, and is responsible for protecting the interests of
shareholders. The majority of the fund's directors are independent of T. Rowe
Price Associates, Inc. (T. Rowe Price); "inside" directors are officers of T.
Rowe Price. The Board of Directors elects the fund's officers, who are listed in
the final table. The business address of each director and officer is 100 East
Pratt Street, Baltimore, MD 21202. The Statement of Additional Information
includes additional information about the fund directors and is available
without charge by calling a T. Rowe Price representative at 1-800-225-5132.
Independent Directors
Name
(Year of Birth) Principal Occupation(s) During Past 5 Years
Year Elected * and Directorships of Other Public Companies
Anthony W. Deering Director, Chairman of the Board, President, and
(1945) Chief Executive Officer, The Rouse Company, real
2001 estate developers; Director, Mercantile Bank
(4/03 to present)
Donald W. Dick, Jr. Principal, EuroCapital Advisors, LLC, an
(1943) acquisition and management advisory firm
1992
David K. Fagin Director, Golden Star Resources Ltd., Canyon
(1938) Resources Corp. (5/00 to present), and Pacific
1992 Rim Mining Corp. (2/02 to present); Chairman and
President, Nye Corp.
Karen N. Horn Managing Director and President, Global Private
(1943) Client Services, Marsh Inc. (1999-2003); Managing
2003 Director and Head of International Private
Banking, Bankers Trust (1996-1999); Director, Eli
Lilly and Company and Georgia Pacific
(5/04 to present)
F. Pierce Linaweaver President, F. Pierce Linaweaver & Associates,
(1934) Inc., consulting environmental and civil engineers
2001
John G. Schreiber Owner/President, Centaur Capital Partners, Inc., a
(1946) real estate investment company; Partner,
2001 Blackstone Real Estate Advisors, L.P.; Director,
AMLI Residential Properties Trust and The Rouse
Company, real estate developers
*Each independent director oversees 112 T. Rowe Price portfolios and serves
until retirement, resignation, or election of a successor.
Inside Directors
Name
(Year of Birth)
Year Elected *
[Number of T. Rowe Price Principal Occupation(s) During Past 5 Years
Portfolios Overseen] and Directorships of Other Public Companies
James A.C. Kennedy, CFA Director and Vice President, T. Rowe Price and
(1953) T. Rowe Price Group, Inc.; Director, T. Rowe
1992 Price Global Investment Services Limited and
[43] T. Rowe Price International, Inc.
James S. Riepe Director and Vice President, T. Rowe Price; Vice
(1943) Chairman of the Board, Director, and Vice
1992 President, T. Rowe Price Group, Inc.; Chairman of
[112] the Board and Director, T. Rowe Price Global Asset
Management Limited, T. Rowe Price Global
Investment Services Limited, T. Rowe Price
Investment Services, Inc., T. Rowe Price
Retirement Plan Services, Inc., and T. Rowe Price
Services, Inc.; Chairman of the Board, Director,
President, and Trust Officer, T. Rowe Price Trust
Company; Director, T. Rowe Price International,
Inc.; Chairman of the Board, Mid-Cap Growth Fund
*Each inside director serves until retirement, resignation, or election of a
successor.
Officers
Name (Year of Birth)
Title and Fund(s) Served Principal Occupation(s)
P. Robert Bartolo, CPA (1972) Vice President, T. Rowe Price; formerly
Vice President, Mid-Cap Growth Fund intern, T. Rowe Price (to 2001)
Brian W.H. Berghuis, CFA (1958) Vice President, T. Rowe Price and
President, Mid-Cap Growth Fund T. Rowe Price Group, Inc.
Stephen V. Booth, CPA (1961) Vice President, T. Rowe Price, T. Rowe
Vice President, Mid-Cap Growth Fund Price Group, Inc., and T. Rowe Price
Trust Company
Brace C. Brooks, CFA (1967) Vice President, T. Rowe Price and
Vice President, Mid-Cap Growth Fund T. Rowe Price Group, Inc.
Joseph A. Carrier (1960) Vice President, T. Rowe Price, T. Rowe
Treasurer, Mid-Cap Growth Fund Price Group, Inc., T. Rowe Price
Investment Services, Inc., and T. Rowe
Price Trust Company
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Anna M. Dopkin, CFA (1967) Vice President, T. Rowe Price and
Vice President, Mid-Cap Growth Fund T. Rowe Price Group, Inc.
Henry M. Ellenbogen (1971) Vice President, T. Rowe Price and
Vice President, Mid-Cap Growth Fund T. Rowe Price Group, Inc.; formerly
Executive Vice President, Business
Development, HelloAsia (to 2001); Chief
of Staff, U.S. Representative Peter
Deutsch (to 1999)
Roger L. Fiery III, CPA (1959) Vice President, T. Rowe Price, T. Rowe
Vice President, Mid-Cap Growth Fund Price Group, Inc., T. Rowe Price
International, Inc., and T. Rowe Price
Trust Company
John R. Gilner (1961) Chief Compliance Officer and Vice
Chief Compliance Officer, President, T. Rowe Price; Vice
Mid-Cap Growth Fund President, T. Rowe Price Investment
Services, Inc., and T. Rowe Price Group,
Inc.
Gregory S. Golczewski (1966) Vice President, T. Rowe Price and
Vice President, Mid-Cap Growth Fund T. Rowe Price Trust Company
Henry H. Hopkins (1942) Director and Vice President, T. Rowe
Vice President, Mid-Cap Growth Fund Price Investment Services, Inc., T. Rowe
Price Services, Inc., and T. Rowe Price
Trust Company; Vice President, T. Rowe
Price, T. Rowe Price Group, Inc.,
T. Rowe Price International, Inc., and
T. Rowe Price Retirement Plan Services,
Inc.
Kris H. Jenner, M.D., D. Phil. (1962) Vice President, T. Rowe Price and
Vice President, Mid-Cap Growth Fund T. Rowe Price Group, Inc.
Patricia B. Lippert (1953) Assistant Vice President, T. Rowe Price
Secretary, Mid-Cap Growth Fund and T. Rowe Price Investment Services,
Inc.
Robert J. Marcotte (1962) Vice President, T. Rowe Price and
Vice President, Mid-Cap Growth Fund T. Rowe Price Group, Inc.
Joseph M. Milano, CFA (1972) Vice President, T. Rowe Price and
Vice President, Mid-Cap Growth Fund T. Rowe Price Group, Inc.
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Jeffrey Rottinghaus, CPA (1970) Vice President, T. Rowe Price and
Vice President, Mid-Cap Growth Fund T. Rowe Price Group, Inc.; formerly
student, the Wharton School, University
of Pennsylvania (to 2001); Information
Technology Consultant, Kelly-Lewey &
Associates (to 1999)
John F. Wakeman (1962) Vice President, T. Rowe Price and
Executive Vice President, T. Rowe Price Group, Inc.
Mid-Cap Growth Fund
Julie L. Waples (1970) Vice President, T. Rowe Price
Vice President, Mid-Cap Growth Fund
R. Candler Young (1971) Vice President, T. Rowe Price and
Vice President, Mid-Cap Growth Fund T. Rowe Price Group, Inc.
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Item 2. Code of Ethics.
The registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR,
applicable to its principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions. A copy of this code of ethics is filed as an exhibit to this Form
N-CSR. No substantive amendments were approved or waivers were granted to this
code of ethics during the period covered by this report.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Directors/Trustees has determined that Mr. David K.
Fagin qualifies as an audit committee financial expert, as defined in Item 3 of
Form N-CSR. Mr. Fagin is considered independent for purposes of Item 3 of Form
N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) - (d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal accountant were
as follows:
2004 2003
Audit Fees $26,406 $26,093
Audit-Related Fees 3,602 1,558
Tax Fees 7,161 6,776
All Other Fees - 124
Audit fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the accountant in
connection with statutory and regulatory filings. Audit-related fees include
amounts reasonably related to the performance of the audit of the registrant's
financial statements, specifically the issuance of a report on internal
controls. Tax fees include amounts related to tax compliance, tax planning, and
tax advice. Other fees include the registrant's pro-rata share of amounts for
agreed-upon procedures in conjunction with service contract approvals by the
registrant's Board of Directors/Trustees.
(e)(1) The registrant's audit committee has adopted a policy whereby audit and
non-audit services performed by the registrant's principal accountant for the
registrant, its investment adviser, and any entity controlling, controlled by,
or under common control with the investment adviser that provides ongoing
services to the registrant require pre-approval in advance at regularly
scheduled audit committee meetings. If such a service is required between
regularly scheduled audit committee meetings, pre-approval may be authorized by
one audit committee member with ratification at the next scheduled audit
committee meeting. Waiver of pre-approval for audit or non-audit services
requiring fees of a de minimis amount is not permitted.
(2) No services included in (b) - (d) above were approved pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Less than 50 percent of the hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees.
(g) The aggregate fees billed for the most recent fiscal year and the preceding
fiscal year by the registrant's principal accountant for non-audit services
rendered to the registrant, its investment adviser, and any entity controlling,
controlled by, or under common control with the investment adviser that provides
ongoing services to the registrant were $903,000 and $821,000, respectively, and
were less than the aggregate fees billed for those same periods by the
registrant's principal accountant for audit services rendered to the T. Rowe
Price Funds.
(h) All non-audit services rendered in (g) above were pre-approved by the
registrant's audit committee. Accordingly, these services were considered by the
registrant's audit committee in maintaining the principal accountant's
independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Not applicable. The complete schedule of investments is included in Item 1 of
this Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. 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 change in the registrant's internal control over financial
reporting that occurred during the registrant's second fiscal quarter covered by
this report that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is
attached.
(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.
(3) Written solicitation to repurchase securities issued by closed-end
companies: not applicable.
(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 February 18, 2005
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 February 18, 2005
By /s/ Joseph A. Carrier
-----------------------------------
Joseph A. Carrier
Principal Financial Officer
Date February 18, 2005