Item 1. Report to Shareholders
T. Rowe Price Mid-Cap Value Fund
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June 30, 2004
Certified Semiannual Report
This report is certified under the Sarbanes-Oxley Act of 2002, which requires
that public companies, including mutual funds, affirm that the information
provided in their annual and semiannual shareholder reports fully and fairly
represents their financial position.
T. Rowe Price Mid-Cap Value Fund
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Certified Semiannual Report (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
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Investor Class
6 Months Year
Ended Ended
6/30/04 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
NET ASSET VALUE
Beginning of
period $ 20.34 $ 15.00 $ 16.40 $ 15.64 $ 13.37 $ 13.66
Investment
activities
Net investment
income (loss) 0.05 0.13 0.13 0.13 0.18 0.23
Net realized
and unrealized
gain (loss) 1.54 5.70 (1.34) 2.07 2.82 0.22
Total from
investment
activities 1.59 5.83 (1.21) 2.20 3.00 0.45
Distributions
Net investment
income - (0.13) (0.12) (0.13) (0.17) (0.23)
Net realized
gain - (0.36) (0.07) (1.31) (0.56) (0.51)
Total
distributions - (0.49) (0.19) (1.44) (0.73) (0.74)
NET ASSET VALUE
End of period $ 21.93 $ 20.34 $ 15.00 $ 16.40 $ 15.64 $ 13.37
--------------------------------------------------------------
Ratios/Supplemental
Data
Total return^ 7.82% 39.00% (7.38)% 14.36% 22.75% 3.52%
Ratio of total
expenses to
average net
assets 0.85%! 0.91% 0.96% 0.98% 0.99% 1.04%
Ratio of net
investment
income (loss)
to average
net assets 0.56%! 0.91% 0.98% 0.95% 1.33% 1.60%
Portfolio
turnover rate 51.7%! 50.4% 51.1% 57.5% 31.9% 26.8%
Net assets,
end of period
(in millions) $ 3,120 $ 1,879 $ 991 $ 503 $ 282 $ 212
^ 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 Value Fund
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Certified Semiannual Report (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
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Advisor Class
6 Months Year 9/30/02
Ended Ended Through
6/30/04 12/31/03 12/31/02
NET ASSET VALUE
Beginning of period $ 20.31 $ 14.99 $ 13.97
Investment activities
Net investment income (loss) 0.07 0.13 0.04*
Net realized and
unrealized gain (loss) 1.49 5.68 1.17**
Total from investment
activities 1.56 5.81 1.21
Distributions
Net investment income - (0.13) (0.12)
Net realized gain - (0.36) (0.07)
Total distributions - (0.49) (0.19)
NET ASSET VALUE
End of period $ 21.87 $ 20.31 $ 14.99
---------------------------------------------
Ratios/Supplemental Data
Total return^ 7.68% 38.89% 8.66%*
Ratio of total expenses to
average net assets 1.05%! 1.08% 1.10%*!
Ratio of net investment
income (loss) to average
net assets 0.36%! 0.64% 1.29%*!
Portfolio turnover rate 51.7%! 50.4% 51.1%
Net assets, end of period
(in thousands) $ 154,348 $ 67,383 $ 1,528
* 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 Value Fund
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Certified Semiannual Report (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
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R Class
6 Months Year 9/30/02
Ended Ended Through
6/30/04 12/31/03 12/30/02
NET ASSET VALUE
Beginning of period $ 20.23 $ 15.00 $ 13.97
Investment activities
Net investment income (loss) 0.07 0.11 0.03*
Net realized and
unrealized gain (loss) 1.46 5.61 1.18**
Total from investment
activities 1.53 5.72 1.21
Distributions
Net investment income - (0.13) (0.11)
Net realized gain - (0.36) (0.07)
Total distributions - (0.49) (0.18)
NET ASSET VALUE
End of period $ 21.76 $ 20.23 $ 15.00
------------------------------------------
Ratios/Supplemental Data
Total return^ 7.56% 38.26% 8.66%*
Ratio of total expenses to
average net assets 1.34%! 1.38% 1.40%*!
Ratio of net investment
income (loss) to average
net assets 0.10%! 0.36% 0.84%*!
Portfolio turnover rate 51.7%! 50.4% 51.1%
Net assets, end of period
(in thousands) $ 77,798 $ 19,195 $ 109
* 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 Value Fund
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Certified Semiannual Report (Unaudited) June 30, 2004
PORTFOLIO OF INVESTMENTS (1) Shares/$ Par Value
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(Cost and value in $ 000s)
COMMON STOCKS 93.1%
CONSUMER DISCRETIONARY 13.6%
Household Durables 1.0%
Newell Rubbermaid 1,430,000 33,605
33,605
Leisure Equipment & Products 0.2%
Eastman Kodak 200,000 5,396
5,396
Media 8.7%
Cablevision Systems, Class A * 1,895,000 37,237
Cox Radio, Class A * 807,100 14,027
Dow Jones 833,500 37,591
Entercom Communications * 1,125,000 41,963
Lamar Advertising, Class A * 190,000 8,237
Meredith 341,000 18,741
New York Times, Class A 470,000 21,014
Pearson (GBP) 3,110,000 37,775
Reuters (GBP) 4,425,000 29,722
Scholastic * 854,500 25,592
Washington Post, Class B 21,000 19,530
291,429
Multiline Retail 2.3%
Big Lots * 1,226,500 17,735
Dillards, Class A 1,065,000 23,750
Family Dollar Stores 1,155,000 35,135
76,620
Specialty Retail 1.2%
Abercrombie & Fitch, Class A 440,000 17,050
GAP 351,000 8,511
Weight Watchers * 350,000 13,699
39,260
Textiles, Apparel, & Luxury Goods 0.2%
Unifi *+ 2,630,000 7,706
7,706
Total Consumer Discretionary 454,016
CONSUMER STAPLES 2.5%
Food & Staples Retailing 0.3%
Costco Wholesale 250,000 10,267
10,267
Food Products 2.2%
Archer-Daniels-Midland 649,000 10,891
Campbell Soup 1,311,500 35,253
Heinz 706,000 27,675
73,819
Total Consumer Staples 84,086
ENERGY 7.4%
Energy Equipment & Services 6.2%
Baker Hughes 178,000 6,702
Cooper Cameron * 665,000 32,385
Diamond Offshore Drilling 3,400,000 81,022
Grant Prideco * 2,350,300 43,387
Hanover Compressor * 2,295,000 27,310
Key Energy Services * 500,000 4,720
Petroleum Geo-Services * 300,000 11,873
207,399
Oil & Gas 1.2%
Forest Oil * 740,000 20,217
Murphy Oil 290,000 21,373
41,590
Total Energy 248,989
FINANCIALS 22.6%
Capital Markets 3.9%
Charles Schwab 3,752,900 36,065
Federated Investors, Class B 470,000 14,260
Janus Capital Group 1,653,900 27,273
LaBranche & Co. 2,180,000 18,356
Northern Trust 804,000 33,993
129,947
Commercial Banks 7.0%
Charter One Financial 509,800 22,528
Citizens Banking 500,000 15,525
Commerce Bancshares 352,773 16,208
First Horizon National 595,000 27,055
Huntington Bancshares 1,650,000 37,785
National Commerce Financial 640,000 20,800
Synovus Financial 1,435,000 36,334
TCF Financial 537,500 31,202
Union Planters 875,000 26,084
233,521
Diversified Financial Services 0.2%
Groupe Bruxelles Lambert (EUR) 120,000 7,681
7,681
Insurance 8.8%
Aon 400,000 11,388
Conseco * 1,175,000 23,383
Genworth Financial, Class A * 1,870,000 42,916
Loews 310,000 18,588
Ohio Casualty * 1,393,000 28,041
Protective Life 425,000 16,435
SAFECO 1,023,700 45,043
Saint Paul Companies 1,281,975 51,971
UnumProvident 1,937,700 30,809
XL Capital 330,000 24,902
293,476
Real Estate 1.8%
Apartment Investment & Management,
REIT, Class A 1,200,000 37,356
Equity Office Properties, REIT 415,000 11,288
Reckson Associates Realty, REIT 455,000 12,494
61,138
Thrifts & Mortgage Finance 0.9%
Radian Group 665,000 31,853
31,853
Total Financials 757,616
HEALTH CARE 9.2%
Biotechnology 1.9%
Human Genome Sciences * 900,000 10,467
MedImmune * 1,825,000 42,705
Vertex Pharmaceuticals * 1,070,000 11,599
64,771
Health Care Providers & Services 5.5%
AmerisourceBergen 570,000 34,075
HealthSouth * 4,950,000 29,700
Laboratory Corporation of America * 130,000 5,161
Lincare Holdings * 1,070,000 35,160
NeighborCare * 1,301,600 40,779
Tenet Healthcare * 3,005,000 40,297
185,172
Pharmaceuticals 1.8%
Andrx * 237,000 6,619
Barr Pharmaceuticals * 465,000 15,671
King Pharmaceuticals * 2,560,000 29,312
Valeant Pharmaceuticals International 395,400 7,908
59,510
Total Health Care 309,453
INDUSTRIALS & BUSINESS SERVICES 9.6%
Aerospace & Defense 1.8%
Raytheon 954,000 34,125
Rockwell Collins 792,200 26,396
60,521
Air Freight & Logistics 0.0%
CNF 11,100 461
461
Airlines 1.2%
Southwest Airlines 2,430,000 40,751
40,751
Commercial Services & Supplies 4.4%
Equifax 1,380,000 34,155
Herman Miller 983,000 28,448
Manpower 545,000 27,670
ServiceMaster 1,445,000 17,802
Viad 1,482,000 40,029
148,104
Road & Rail 2.2%
CSX 1,135,000 37,194
Union Pacific 575,000 34,184
71,378
Total Industrials & Business Services 321,215
INFORMATION TECHNOLOGY 10.4%
Communications Equipment 0.3%
Tellabs * 1,260,000 11,012
11,012
Electronic Equipment & Instruments 2.3%
AVX 1,806,100 26,098
Ingram Micro, Class A * 954,970 13,819
Molex, Class A 1,366,200 37,270
77,187
IT Services 3.0%
BearingPoint * 3,752,400 33,284
BISYS Group * 2,550,000 35,853
Ceridian * 1,111,700 25,013
Hewitt Associates, Class A * 252,000 6,930
101,080
Semiconductor & Semiconductor Equipment 1.1%
Novellus Systems * 1,100,000 34,584
34,584
Software 3.7%
BMC Software * 2,192,000 40,552
Cadence Design Systems * 2,140,000 31,308
Intuit * 530,000 20,447
Network Associates * 1,790,000 32,453
124,760
Total Information Technology 348,623
MATERIALS 7.1%
Chemicals 2.2%
Agrium 580,000 8,439
Great Lakes Chemical 941,800 25,485
IMC Global 821,000 11,001
Potash Corp./Saskatchewan 184,000 17,830
Rhodia (EUR) 7,000,000 9,550
72,305
Metals & Mining 1.8%
Harmony Gold 1,770,000 18,744
Meridian Gold * 1,842,800 23,901
Nucor 59,500 4,567
Teck Cominco, Class B (CAD) 750,000 13,427
60,639
Paper & Forest Products 3.1%
Bowater 815,000 33,896
Domtar (CAD) 1,359,500 17,453
MeadWestvaco 1,227,200 36,067
Potlatch 404,700 16,852
104,268
Total Materials 237,212
TELECOMMUNICATION SERVICES 3.0%
Diversified Telecommunication Services 1.6%
AT&T 1,345,000 19,677
Qwest Communications International * 9,588,700 34,424
54,101
Wireless Telecommunication Services 1.4%
Crown Castle International * 1,188,400 17,529
Telephone and Data Systems 389,000 27,697
45,226
Total Telecommunication Services 99,327
UTILITIES 7.7%
Electric Utilities 3.5%
CMS Energy * 1,417,000 12,937
El Paso Electric * 970,000 14,977
FirstEnergy 698,200 26,120
Pinnacle West Capital 459,500 18,559
Teco Energy 2,775,000 33,272
Unisource Energy 233,300 5,797
XCEL Energy 462,300 7,725
119,387
Gas Utilities 1.2%
NiSource 1,927,000 39,735
39,735
Multi-Utilities & Unregulated Power 3.0%
Duke Energy 1,855,000 37,638
Dynegy, Class A * 5,900,000 25,134
NRG Energy * 1,512,500 37,510
100,282
Total Utilities 259,404
Total Common Stocks (Cost $2,822,606) 3,119,941
CONVERTIBLE BONDS 0.2%
U.S. Cellular, LYONs, 6/15/15 7,029,000 3,699
XCEL Energy, 144A, 7.50%, 11/21/07 1,365,000 2,037
Total Convertible Bonds (Cost $4,280) 5,736
SHORT-TERM INVESTMENTS 6.2%
Money Market Fund 6.2%
T. Rowe Price Reserve
Investment Fund, 1.16% # 208,147,295 208,147
Total Short-Term Investments (Cost $208,147) 208,147
Total Investments in Securities
99.5% of Net Assets (Cost $3,035,033) $3,333,824
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(1) Denominated in U.S. dollars unless otherwise noted
# Seven-day yield
* Non-income producing
! Affiliated company - See Note 2.
144A Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may be resold in transactions exempt from registration only to
qualified institutional buyers - total value of such securities at
period-end amounts to $2,037 and represents 0.1% of net assets
CAD Canadian dollar
EUR Euro
GBP British pound
LYONs Liquid Yield Option Notes
REIT Real Estate Investment Trust
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Mid-Cap Value Fund
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Certified Semiannual Report (Unaudited) June 30, 2004
STATEMENT OF ASSETS AND LIABILITIES
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(In thousands except shares and per share amounts)
Assets
Investments in securities, at value (cost $3,035,033) $ 3,333,824
Other assets 54,058
Total assets 3,387,882
Liabilities
Total liabilities 36,173
NET ASSETS $ 3,351,709
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Net Assets Consist of:
Undistributed net investment income (loss) $ 7,151
Undistributed net realized gain (loss) 220,532
Net unrealized gain (loss) 298,794
Paid-in-capital applicable to 152,893,975 shares of
$0.0001 par value capital stock outstanding;
1,000,000,000 shares authorized 2,825,232
NET ASSETS $ 3,351,709
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NET ASSET VALUE PER SHARE
Investor Class
($3,119,563,045/142,260,094 shares outstanding) $ 21.93
-------------
Advisor Class
($154,348,109/7,058,067 shares outstanding) $ 21.87
-------------
R Class
($77,797,934/3,575,814 shares outstanding) $ 21.76
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The accompanying notes are an integral part of these financial statements.
T. Rowe Price Mid-Cap Value Fund
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Certified Semiannual Report (Unaudited)
STATEMENT OF OPERATIONS
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($ 000s)
6 Months
Ended
6/30/04
Investment Income (Loss)
Income
Dividend $ 18,397
Interest 208
Total income 18,605
Expenses
Investment management 8,759
Shareholder servicing
Investor Class 1,916
Advisor Class 57
R Class 31
Rule 12b-1 fees
Advisor Class 134
R Class 120
Registration 207
Custody and accounting 120
Prospectus and shareholder reports
Investor Class 88
Advisor Class 4
R Class 5
Legal and audit 13
Directors 4
Miscellaneous 2
Total expenses 11,460
Expenses paid indirectly (6)
Net expenses 11,454
Net investment income (loss) 7,151
T. Rowe Price Mid-Cap Value Fund
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Certified Semiannual Report (Unaudited)
STATEMENT OF OPERATIONS
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($ 000s)
6 Months
Ended
6/30/04
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 165,004
Foreign currency transactions (156)
Net realized gain (loss) 164,848
Change in net unrealized gain (loss)
Securities 19,976
Other assets and liabilities
denominated in foreign currencies 1
Change in net unrealized gain (loss) 19,977
Net realized and unrealized gain (loss) 184,825
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 191,976
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The accompanying notes are an integral part of these financial statements.
T. Rowe Price Mid-Cap Value Fund
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Certified Semiannual Report (Unaudited)
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
($ 000s)
6 Months Year
Ended Ended
6/30/04 12/31/03
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 7,151 $ 11,463
Net realized gain (loss) 164,848 92,745
Change in net unrealized gain (loss) 19,977 353,473
Increase (decrease) in net
assets from operations 191,976 457,681
Distributions to shareholders
Net investment income
Investor Class - (11,379)
Advisor Class - (396)
R Class - (100)
Net realized gain
Investor Class - (31,511)
Advisor Class - (1,096)
R Class - (278)
Decrease in net assets from distributions - (44,760)
Capital share transactions *
Shares sold
Investor Class 1,289,016 709,037
Advisor Class 95,797 61,640
R Class 60,601 18,883
Distributions reinvested
Investor Class - 40,256
Advisor Class - 1,276
R Class - 379
Shares redeemed
Investor Class (229,848) (265,006)
Advisor Class (16,632) (4,654)
R Class (5,214) (1,519)
Increase (decrease) in net assets from
capital share transactions 1,193,720 560,292
Net Assets
Increase (decrease) during period 1,385,696 973,213
Beginning of period 1,966,013 992,800
End of period $ 3,351,709 $ 1,966,013
----------- -----------
(Including undistributed net investment
income of $7,151 at 6/30/04 and
$0 at 12/31/03)
T. Rowe Price Mid-Cap Value Fund
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Certified Semiannual Report (Unaudited)
STATEMENT OF CHANGES IN NET ASSETS
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($ 000s)
6 Months Year
Ended Ended
6/30/04 12/31/03
*Share information
Shares sold
Investor Class 60,748 40,573
Advisor Class 4,529 3,402
R Class 2,877 1,007
Distributions reinvested
Investor Class - 2,058
Advisor Class - 65
R Class - 19
Shares redeemed
Investor Class (10,878) (16,315)
Advisor Class (790) (250)
R Class (250) (85)
Increase (decrease) in shares outstanding 56,236 30,474
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Mid-Cap Value Fund
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Certified Semiannual Report (Unaudited) June 30, 2004
NOTES TO FINANCIAL STATEMENTS
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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Mid-Cap Value 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 primarily in mid-size companies that appear to be
undervalued. The fund has three classes of shares: the Mid-Cap Value original
share class, referred to in this report as the Investor Class, offered since
June 28, 1996, Mid-Cap Value--Advisor Class (Advisor Class), offered since
September 30, 2002, and Mid-Cap Value--R Class (R Class), offered since
September 30, 2002. Advisor Class shares are sold only through brokers and other
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 are generally traded in the over-the-counter market. Securities
with original maturities of one year or more are valued at prices furnished by
dealers who make markets in such securities or by an independent pricing
service, which considers yield or price of bonds of comparable quality, coupon,
maturity, and type, as well as prices quoted by dealers who make markets in such
securities. 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 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 $237,000 for the
six months ended June 30, 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. Income distributions are declared and
paid by each class on an annual basis. Distributions to shareholders are
recorded on the ex-dividend date. 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
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, 2004, the
value of affiliated companies totaled $7,706,000, representing 0.2% of the value
of the fund's investments in securities.
Other
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $1,733,651,000 and $642,264,000, respectively, for the six months
ended June 30, 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 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. 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, 2004.
At June 30, 2004, the cost of investments for federal income tax purposes was
$3,035,033,000. Net unrealized gain aggregated $298,794,000 at period-end, of
which $365,770,000 related to appreciated investments and $66,976,000 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 average daily net assets to those of the group. At June 30, 2004,
the effective annual group fee rate was 0.31%, and investment management fee
payable totaled $1,735,000.
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.
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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
For the six months ended June 30, 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. Expenses incurred pursuant to these
service agreements totaled $1,028,000 for the six months ended June 30, 2004, of
which $128,000 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,
2004, the fund was charged $159,000 for shareholder servicing costs related to
the college savings plans, of which $113,000 was for services provided by Price
and $26,000 was payable at period-end. At June 30, 2004, approximately 3.09% 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 Spectrum Funds (Spectrum
Funds) and T. Rowe Price Retirement Funds (Retirement Funds) may invest.
Neither the Spectrum Funds nor the Retirement Funds invest in the underlying
Price funds for the purpose of exercising management or control. Pursuant to
separate, special servicing agreements, expenses associated with the operation
of the Spectrum and 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 Spectrum and Retirement Funds, respectively.
Expenses allocated under these agreements are reflected as shareholder servicing
expenses in the accompanying financial statements. For the six months ended June
30, 2004, the fund was allocated $185,000 of Spectrum Funds' expenses and
$34,000 of Retirement Funds' expenses. Of these amounts, $153,000 related to
services provided by Price and $30,000 was payable at period-end.
At June 30, 2004, approximately 6.2% of the outstanding shares of the Investor
Class were held by the Spectrum Funds and 2.1% 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. 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. During the six months ended June 30, 2004,
dividend income from the Reserve Funds totaled $1,020,000.
T. Rowe Price Mid-Cap Value Fund
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Certified Semiannual Report
INFORMATION ON PROXY VOTING
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A description of the policies and procedures that the T. Rowe Price Mid-Cap
Value Fund uses to determine how to vote proxies relating to portfolio
securities is available, without charge, upon request by calling 1-800-225-5132.
It also appears in the fund's Statement of Additional Information (Form 485B),
which can be found on the SEC's Web site, www.sec.gov.
Item 2. Code of Ethics.
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 is filed as an
exhibit to the registrant's annual Form N-CSR. No substantive amendments were
approved or waivers were granted to this code of ethics during the registrant's
most recent fiscal half-year.
Item 3. Audit Committee Financial Expert.
Disclosure required in registrant's annual Form N-CSR.
Item 4. Principal Accountant Fees and Services.
Disclosure required in registrant's annual Form N-CSR.
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. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. 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 11. Exhibits.
(a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is filed
with the registrant's annual Form N-CSR.
(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 Value Fund, Inc.
By: /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date: August 16, 2004
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 16, 2004
By: /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date: August 16, 2004