<PAGE>
Semiannual Report
MID-CAP
VALUE FUND
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JUNE 30, 2000
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[LOGO OF T. ROWE PRICE]
T. ROWE PRICE
<PAGE>
REPORT HIGHLIGHTS
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Mid-Cap Value Fund
. A major growth-stock correction hit the markets in spring, but value stocks
still trailed growth stocks.
. The fund's 6- and 12-month results reflected the persistent headwind
against value investing.
. Several holdings posted excellent returns, but they were offset by modest
losses in several sectors.
. We think it likely that higher-risk growth investing will become less
attractive if growth stocks suffer many more steep corrections.
UPDATES AVAILABLE
For updates on T. Rowe Price funds following the end of each calendar quarter,
please see our Web site at www.troweprice.com.
<PAGE>
FELLOW SHAREHOLDERS
The equity markets were volatile in the six months ended June 30, 2000, rising
through most of the first quarter, correcting sharply in spring, and finally
rebounding through June. After the decline, value stocks in some sectors became
more popular as investors developed greater price consciousness. Overall,
however, growth stocks maintained a significant edge over value investments.
----------------------
PERFORMANCE COMPARISON
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Periods Ended 6/30/00 6 Months 12 Months
-------------------------------------------------------------
Mid-Cap Value Fund 2.62% -0.74%
S&P MidCap Index 8.97 16.98
Lipper Mid-Cap Value
Funds Average 4.30 5.49
Reflecting these trends, your fund posted a relatively unexciting 2.62% return
for the period. This showing fell behind both the S&P MidCap Index and the
Lipper Mid-Cap Value Funds Average that the fund uses as its formal benchmarks.
Although we're disappointed with this result, it is worth noting that returns
among mid-cap stocks varied tremendously during the period. For example, the
Lipper Mid-Cap Value Fund Index, which is composed of the 20 largest funds in
the category, had a 1.96% result, while the Russell Midcap Value Index fell
0.69%. In most cases, the differences among benchmarks can be attributed to the
persistent performance discrepancy that has favored growth issues over value
stocks. However, technology exposure was a factor, too, as some indices were
aided by tech holdings.
Growth outpaced value primarily in the first quarter, with last year's highly
speculative technology leaders continuing their strong run. Then, the Federal
Reserve threw a wet blanket on the rally when it stepped up its anti-inflation
efforts. A series of interest rate hikes in February, March, and May dampened
enthusiasm for high-priced, high-potential stocks, which corrected severely
between late March and early May. The period was relatively positive for value
strategies, as investors suddenly became concerned about the valuations of the
stocks they owned.
The shift wasn't ideal for value investors, though, because rising interest
rates deflated prices on banks and other rate-sensitive industries. In
1
<PAGE>
addition, investors clearly still preferred high-growth opportunities. Toward
the end of the period, in fact, growth stocks strongly reasserted themselves.
Nonetheless, value stocks in a number of industries performed well through the
first half, notably in the energy and real estate areas and certain consumer
industries. After a period of extreme gains for companies offering more promise
than profits, investors' new price consciousness was encouraging.
INVESTMENT REVIEW
The fund enjoyed its best performance among sectors where earnings were better
than expected. Several once-beaten-down consumer holdings excelled after posting
earnings recoveries, contributing more than a full percentage point to fund
results. For example, Reebok rose 94% in the half on the strength of
better-than-expected first-quarter earnings.
We picked up ground on our competitors in the financial sector. Our biggest
winner here was the mutual fund firm Federated Investors, which rose over 75% in
the half. Federated rose in part due to revived merger and acquisition activity
among money-management firms. We were also aided by our significant holdings in
real estate investment trusts (REITs), which rallied after a long hiatus as an
out-of-favor sector. Not only were we overweight in REITs versus our benchmarks,
but our particular REIT holdings led their sector.
It is always tough to find technology stocks that meet our value criteria, and
we remain underweighted in the area. That can be beneficial when tech stocks
decline as they did in spring, but when the sector rallied in the first quarter
and again in June, our position hurt relative performance. We had a few winners
among tech and tech-related issues, notably PerkinElmer (up 59%) and Littelfuse
(up 101%). Unfortunately, these successes were overshadowed by a 55% loss in
Parametric Technology. In addition, we stayed away from several high-flying
names in the Russell Index because, in the final analysis, they had few of what
investors would consider to be traditional value characteristics.
Among our top contributors in the first half were Dynegy, U.S. Foodservice, and
Baker Hughes. Dynegy is a player in the U.S. merchant power markets
WE WERE ALSO AIDED BY OUR SIGNIFICANT HOLDINGS IN REAL ESTATE INVESTMENT TRUSTS
(REITS), WHICH RALLIED AFTER A LONG HIATUS...
2
<PAGE>
through plant ownership and power trading operations. We received the shares
after it acquired our holdings in electric utility Illinova. Investor concerns
over a potentially hot summer and regional power shortages drove the shares up
103%, adding almost $0.14 to the fund's net asset value (NAV). U.S. Foodservice,
meanwhile, rose over 54% as it agreed to be acquired by the Dutch firm Ahold.
Strong appreciation here added almost $0.12 to NAV. Finally, the advance in
energy prices helped all of our oil services firms. Baker Hughes was a primary
beneficiary, rising 53% and adding over $0.07 to NAV.
Fortunately, only one stock detracted significantly from performance. As noted
earlier, Parametric Technology fell in the half, costing as much as $0.13 to
NAV. The firm experienced slower-than-expected growth in its traditional
mechanical-design business, which, in turn, led to lower expectations for the
year. Parametric had been focusing its efforts on its Windchill e-commerce
product and took its eye off the ball. We have since exited the position.
Elsewhere in the portfolio, stock declines were widespread but rarely as
dramatic. Although we've seen investors become more value conscious in recent
months, the market's overall infatuation with growth-stock investing has not
abated, leaving many high-quality value stocks to languish. Although the trend
is frustrating, we are encouraged that our portfolio is full of superb companies
selling very inexpensively -- a fact that should benefit performance when value
returns to prominence.
INVESTMENT STRATEGY
Our major new commitments included Affiliated Computer Services, transportation
company Tidewater, and National Commerce Bancorporation.
During the quarter we took advantage of the technology sell-off to selectively
build our technology weighting. Affiliated Computer Services (ACS) was our
largest purchase during the quarter. ACS is a provider of information technology
outsourcing services to middle-market companies. Like many technology companies,
ACS experienced slower sales growth around the Y2K period. We believe that the
trend toward outsourcing technology needs is strong and that ACS will return to
its 20% growth rate. We were able to buy this stock for 12 times estimated
earnings in 2001, a historically low valuation.
3
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We also purchased Tidewater, which provides transportation services to the oil
industry. The company rents out vessels that transport workers to oil rigs. The
situation is right for an improvement in the daily rental rates for these boats,
and Tidewater is ready to take advantage of the trend. We were able to purchase
the stock for about seven times potential earnings.
----------------------
Sector Diversification
--------------------------------------------------------------------------------
[GRAPH]
26% Consumer Services and
Consumer Cyclicals
16% Capital Equipment, Process
Industries and Basic Materials
15% Energy and Utilities
15% Financial
10% Consumer Nondurables
10% Business Services and
Transportation
7% Technology
1% Reserves
Based on net assets as of 6/30/00.
National Commerce Bank is our newest major financial holding. The bank is the
result of a recently completed merger between Central Carolina Bank and National
Commerce Bank. This $3.2 billion market cap financial institution is well
capitalized with attractive returns, a conservative credit culture, and very
capable management. We found the shares highly attractive at 12.6 times this
year's earnings.
The largest sale during the period was U.S. Foodservice, which was acquired by
Ahold in early April. We also sold positions in Dynegy and utility DQE to lock
in the price appreciation of both stocks. Another electric utility, New England
Electric, was sold after completion of an acquisition by National Grid PLC, a
U.K.-based electric utility. We also trimmed holdings in oil services firm Smith
International following a runup in the shares.
Outlook
At an investor conference we recently attended, a value manager made a very
interesting and amusing analogy. He compared life as a value manager with the
role of a cast member in the new CBS television show Survivor. Like these TV
castaways, value managers remain marooned in a very hostile environment, wherein
the market still favors growth investing. Moreover, he noted that every week
someone gets voted "off the team." The newspapers this spring were filled with
stories of well-known value managers calling it quits and closing up shop.
However, we believe that, like in the show, the ultimate reward will come to the
survivor.
4
<PAGE>
We expect that your fund will be a survivor of the market shakeout. Expensive
momentum investment strategies assume a great deal of risk, and we saw the
downside of that approach this past quarter -- at one point, the Russell Midcap
Growth index was down 67.41%. We continue to believe that value stocks will
regain a performance edge versus the broader indices and that our mid-cap value
style will pay handsome rewards.
Respectfully submitted,
/s/ Greg A. McCrickard
Greg A. McCrickard
President and Chairman of the Investment Advisory Committee
Mid-Cap Value Fund
July 21, 2000
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T. ROWE PRICE MID-CAP VALUE FUND
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PORTFOLIO HIGHLIGHTS
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/00
--------------------------------------------------------------------------------
Federated Investors 1.9%
Neiman Marcus 1.9
McCormick 1.9
Baker Hughes 1.8
ProLogis Trust 1.8
--------------------------------------------------------------------------------
Analogic 1.8
PerkinElmer 1.7
Meredith 1.7
Northern Trust 1.7
PartnerRe 1.5
--------------------------------------------------------------------------------
Chris-Craft 1.5
A.O. Smith 1.5
Murphy Oil 1.5
SPX 1.4
BJ's Wholesale Club 1.4
--------------------------------------------------------------------------------
Littelfuse 1.4
Amerada Hess 1.4
International Multifoods 1.3
TCF Financial 1.3
Sysco 1.3
--------------------------------------------------------------------------------
Houghton Mifflin 1.2
NOVA Corporation 1.2
Teco Energy 1.2
L-3 Communications Holdings 1.2
Hubbell 1.1
--------------------------------------------------------------------------------
Total 37.6%
Note: Table excludes reserves.
6
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T. ROWE PRICE MID-CAP VALUE FUND
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--------------------
PORTFOLIO HIGHLIGHTS
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MAJOR PORTFOLIO CHANGES
Listed in descending order of size
6 Months Ended 6/30/00
Largest Purchases Largest Sales
--------------------------------------------------------------------------------
NOVA Corporation * U.S. Foodservice **
Affiliated Computer Services * New England Electric System **
Houghton Mifflin * Dynegy
NCR * DQE **
Cabot * BJ's Wholesale Club
Tidewater * PerkinElmer
Sysco * Parametric Technology **
National Commerce Bancorporation * Domtar
Eaton Smith International
Concord EFS * McDermott International **
* Position added
** Position eliminated
7
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T. ROWE PRICE MID-CAP VALUE FUND
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----------------------
PERFORMANCE COMPARISON
--------------------------------------------------------------------------------
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.
[GRAPH]
Lipper Mid-Cap Value
S&P MidCap Index Funds Average Mid-Cap Value Fund
6/30/96 10,000 10,000 10,000
6/30/97 12,333 12,401 12,938
6/30/98 15,681 14,869 15,682
6/30/99 18,375 15,397 16,041
6/30/00 21,495 16,075 15,922
------------------------------------
AVERAGE ANNUAL COMPOUND TOTAL RETURN
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This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
Since Inception
Periods Ended 6/30/00 1 Year 3 Years Inception Date
--------------------------------------------------------------------------------
Mid-Cap Value Fund -0.74% 7.16% 12.31% 6/28/96
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
8
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T. ROWE PRICE MID-CAP VALUE FUND
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Unaudited
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FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
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<TABLE>
<CAPTION>
6 Months Year 6/28/96
Ended Ended Through
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96
NET ASSET VALUE
<S> <C> <C> <C> <C> <C>
Beginning of period $ 13.37 $ 13.66 $ 14.47 $ 11.56 $ 10.00
-------------------------------------------------------------------
Investment activities
Net investment income (loss) 0.09 0.23 0.19 0.08* 0.10*
Net realized and
unrealized gain (loss) 0.26 0.22 (0.05) 3.05 1.53
Total from
investment activities 0.35 0.45 0.14 3.13 1.63
Distributions
Net investment income - (0.23) (0.19) (0.08) (0.07)
Net realized gain - (0.51) (0.76) (0.14) -
Total distributions - (0.74) (0.95) (0.22) (0.07)
NET ASSET VALUE
End of period $ 13.72 $ 13.37 $ 13.66 $ 14.47 $ 11.56
------------------------------------------------------------------
Ratios/Supplemental Data
Total return. 2.62% 3.52% 1.39% 27.1%* 16.3%*
Ratio of total expenses to
average net assets 1.02%+ 1.04% 1.08% 1.25%* 1.25%*+
Ratio of net investment
income (loss) to average
net assets 1.28%+ 1.60% 1.24% 1.18%* 2.10%*+
Portfolio turnover rate 31.7%+ 26.8% 32.0% 16.0% 3.9%+
Net assets, end of period
(in thousands) $212,727 $211,730 $221,338 $217,991 $49,189
</TABLE>
. 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.
* Excludes expenses in excess of a 1.25% voluntary expense
limitation in effect through 12/31/97.
+ Annualized
The accompanying notes are an integral part of these financial statements.
9
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T. ROWE PRICE MID-CAP VALUE FUND
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Unaudited June 30, 2000
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STATEMENT OF NET ASSETS Shares/Par Value
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In thousands
COMMON STOCKS 97.8%
FINANCIAL 15.2%
Bank and Trust 9.0%
Bank United 59,000 $ 2,085
Banknorth Group * 78,000 1,189
First Security 96,750 1,315
First Tennessee National 58,500 969
Mercantile Bankshares 79,000 2,358
National Commerce Bancorporation 90,000 1,448
North Fork Bancorporation 107,500 1,626
Northern Trust 54,500 3,544
TCF Financial 107,000 2,749
Wilmington Trust 45,000 1,924
------------
19,207
------------
Insurance 3.5%
ACE Limited 50,000 1,400
PartnerRe 93,000 3,296
PMI Group 38,000 1,805
W. R. Berkley 54,000 1,011
------------
7,512
------------
Financial Services 2.7%
Delta Financial * 120,000 195
Federated Investors (Class B) 117,500 4,120
Leucadia National 61,000 1,391
------------
5,706
------------
Total Financial 32,425
------------
UTILITIES 6.3%
Water Utilities 1.4%
Azurix * 94,500 661
United Water Resources 63,000 2,197
------------
2,858
------------
Telephone 1.5%
Broadwing 64,000 1,660
Centurytel 56,000 1,610
------------
3,270
------------
10
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T. ROWE PRICE MID-CAP VALUE FUND
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Shares/Par Value
--------------------------------------------------------------------------------
In thousands
Electric Utilities 3.4%
FirstEnergy 55,500 $ 1,297
GPU 45,000 1,218
Pinnacle West Capital 66,500 2,253
Teco Energy 125,500 2,518
------------
7,286
------------
Total Utilities 13,414
------------
CONSUMER NONDURABLES 10.4%
Food Processing 3.2%
International Multifoods 161,000 2,787
McCormick 122,000 3,965
------------
6,752
------------
Hospital Supplies/Hospital Management 0.5%
Lincare * 45,000 1,107
------------
1,107
------------
Health Care Services 0.9%
UnitedHealth Group 20,000 1,715
Wellpoint Health Networks * 4,000 290
------------
2,005
------------
Miscellaneous Consumer Products 5.8%
Blyth 80,500 2,375
Hasbro 56,500 851
Reebok * 68,500 1,092
Stanley Works 85,000 2,019
Sysco 65,000 2,738
Tomkins (GBP) 265,100 860
Unifi * 135,000 1,671
WestPoint Stevens 60,000 667
------------
12,273
------------
Total Consumer Nondurables 22,137
------------
CONSUMER SERVICES 11.4%
General Merchandisers 3.3%
BJ's Wholesale Club * 90,000 2,970
Neiman Marcus Group * 135,000 4,075
------------
7,045
------------
11
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T. ROWE PRICE MID-CAP VALUE FUND
--------------------------------------------------------------------------------
Shares/Par Value
--------------------------------------------------------------------------------
In thousands
Specialty Merchandisers 1.9%
CVS 13,208 $ 528
Intimate Brands 60,000 1,185
Nordstrom 95,000 2,292
------------
4,005
------------
Entertainment and Leisure 1.2%
Houghton Mifflin 55,000 2,568
------------
2,568
------------
Media and Communications 5.0%
Chris-Craft 49,440 3,266
Knight-Ridder 40,000 2,128
Meredith 107,500 3,628
Valassis Communications * 45,000 1,716
------------
10,738
------------
Total Consumer Services 24,356
------------
CONSUMER CYCLICALS 13.6%
Automobiles and Related 5.4%
A.O. Smith (Class B) 152,500 3,193
Eaton 34,000 2,278
Littelfuse * 60,000 2,966
SPX * 25,000 3,024
------------
11,461
------------
Building & Real Estate 6.5%
Archstone Communities Trust, REIT 88,500 1,864
Arden Realty, REIT 77,500 1,821
ProLogis Trust, REIT 167,500 3,570
Reckson Associates Realty, REIT 92,000 2,185
Rouse 90,500 2,240
Southdown 20,000 1,155
Starwood Hotels & Resorts Worldwide, REIT 13,500 439
Texas Industries 18,000 520
------------
13,794
------------
Miscellaneous Consumer Durables 1.7%
B.F. Goodrich 10,640 362
Black & Decker 49,000 1,926
Masco 73,000 1,319
3,607
------------
Total Consumer Cyclicals 28,862
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12
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T. ROWE PRICE MID-CAP VALUE FUND
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Shares/Par Value
--------------------------------------------------------------------------------
In thousands
TECHNOLOGY 6.5%
Electronic Components 1.8%
Analogic 95,000 $ 3,767
3,767
------------
Electronic Systems 1.7%
PerkinElmer 55,000 3,637
3,637
------------
Aerospace & Defense 3.0%
Allegheny Technologies 80,000 1,440
Harsco 90,000 2,295
L-3 Communications * 43,000 2,454
Lockheed Martin 10,000 248
6,437
------------
Total Technology 13,841
------------
CAPITAL EQUIPMENT 3.5%
Electrical Equipment 1.6%
Hubbell (Class A) 9,000 233
Hubbell (Class B) 84,000 2,142
SLI 75,000 909
3,284
------------
Machinery 1.9%
Danaher 24,000 1,187
Parker Hannifin 28,500 976
Teleflex 52,000 1,927
4,090
------------
Total Capital Equipment 7,374
------------
BUSINESS SERVICES AND
TRANSPORTATION 9.5%
Computer Service and Software 2.8%
Affiliated Computer Services (Class A) * 70,000 2,314
NCR * 55,000 2,142
Reynolds & Reynolds (Class A) 85,000 1,551
6,007
------------
13
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T. ROWE PRICE MID-CAP VALUE FUND
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Shares/Par Value
--------------------------------------------------------------------------------
In thousands
Transportation Services 1.6%
CNF Transportation 50,000 $ 1,138
Tidewater 60,000 2,160
3,298
------------
Miscellaneous Business Services 5.1%
Concord EFS * 84,700 2,202
Equifax 37,000 971
Galileo International 69,500 1,451
H&R Block 18,500 599
Manpower 37,000 1,184
NOVA Corporation * 91,500 2,556
ServiceMaster 173,000 1,968
10,931
------------
Total Business Services and Transportation 20,236
------------
ENERGY 9.0%
Energy Services 3.7%
Baker Hughes 121,000 3,872
BJ Services * 37,500 2,344
Grant Prideco * 7,000 175
Smith International * 17,500 1,274
Weatherford International * 7,000 279
7,944
------------
Exploration and Production 1.5%
Devon Energy 20,000 1,124
Union Pacific Resources 93,500 2,057
3,181
------------
Integrated Petroleum - Domestic 2.8%
Amerada Hess 47,000 2,902
Murphy Oil 52,000 3,091
5,993
------------
Gas & Gas Transmission 1.0%
Dynegy (Class A) 30,000 2,049
2,049
------------
Total Energy 19,167
------------
14
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T. ROWE PRICE MID-CAP VALUE FUND
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Shares/Par Value
--------------------------------------------------------------------------------
In thousands
PROCESS INDUSTRIES 8.1%
Diversified Chemicals 2.1%
Arch Chemicals 101,000 $ 2,209
Cabot 85,000 2,316
4,525
------------
Specialty Chemicals 0.6%
Great Lakes Chemical 42,000 1,323
1,323
------------
Paper and Paper Products 2.7%
Consolidated Papers 45,500 1,664
Packaging Corp. of America * 94,500 957
Sonoco Products 112,000 2,303
Wausau-Mosinee Paper 84,000 719
5,643
------------
Forest Products 1.7%
Domtar 58,500 545
Plum Creek Timber 38,000 988
Potlatch 46,000 1,524
Rayonier 13,500 484
3,541
------------
Building & Construction 1.0%
Martin Marietta Materials 52,000 2,103
2,103
------------
Total Process Industries 17,135
------------
BASIC MATERIALS 4.3%
Metals 4.3%
Alcoa 25,440 738
Inco * 121,000 1,860
Newmont Mining 101,500 2,195
Nucor 51,500 1,709
Phelps Dodge 41,500 1,543
Ryerson Tull 100,000 1,038
Total Basic Materials 9,083
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Total Common Stocks (Cost $206,515) 208,030
-------------
15
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T. ROWE PRICE MID-CAP VALUE FUND
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<TABLE>
Shares/Par Value
--------------------------------------------------------------------------------------------------
In thousands
CONVERTIBLE PREFERRED STOCKS 0.1%
<S> <C> <C>
ProLogis Trust (Series B), REIT, 7.00% 10,500 $ 286
Total Convertible Preferred Stocks (Cost $245) 286
----------
CONVERTIBLE BONDS 0.8%
Liberty Property Trust, Sub. Deb., 9.00%, 7/1/01 $ 200,000 260
Security Capital U.S. Realty, REIT, (144a), 2.00%, 5/22/03 2,000,000 1,570
Total Convertible Bonds (Cost $1,956) 1,830
-----------
SHORT-TERM INVESTMENTS 1.3%
Money Market Funds 1.3%
Reserve Investment Fund, 6.68% # 2,686,958 2,687
Total Short-Term Investments (Cost $2,687) 2,687
------------
</TABLE>
16
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T. ROWE PRICE MID-CAP VALUE FUND
--------------------------------------------------------------------------------
Value
--------------------------------------------------------------------------------
In thousands
Total Investments in Securities
100.0% of Net Assets (Cost $211,403) $ 212,833
Other Assets Less Liabilities (106)
---------
NET ASSETS $ 212,727
=========
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 1,381
Accumulated net realized gain/loss - net of distributions 9,377
Net unrealized gain (loss) 1,431
Paid-in-capital applicable 15,502,924 shares of $0.0001 par
value capital stock outstanding; 1,000,000,000 shares authorized 200,538
---------
NET ASSETS $ 212,727
=========
NET ASSET VALUE PER SHARE $ 13.72
=========
# Seven-day yield
* Non-income producing
REIT Real Estate Investment Trust
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers -- total of such securities at period-end amounts to
0.7% of net assets.
GBP British sterling
The accompanying notes are an integral part of these financial statements.
17
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T. ROWE PRICE MID-CAP VALUE FUND
--------------------------------------------------------------------------------
Unaudited
-----------------------
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/00
Investment Income (Loss)
Income
Dividend $ 2,127
Interest 246
-----------
Total income 2,373
-----------
Expenses
Investment management 688
Shareholder servicing 277
Custody and accounting 48
Prospectus and shareholder reports 15
Registration 10
Legal and audit 7
Directors 4
Miscellaneous 2
-----------
Total expenses 1,051
Expenses paid indirectly (1)
-----------
Net expenses 1,050
-----------
Net investment income (loss) 1,323
-----------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities 3,973
Change in net unrealized gain or loss on securities 34
-----------
Net realized and unrealized gain (loss) 4,007
-----------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 5,330
===========
The accompanying notes are an integral part of these financial statements.
18
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T. ROWE PRICE MID-CAP VALUE FUND
--------------------------------------------------------------------------------
Unaudited
----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/00 12/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 1,323 $ 3,411
Net realized gain (loss) 3,973 11,915
Change in net unrealized gain or loss 34 (8,735)
-----------------------
Increase (decrease) in net assets from operations 5,330 6,591
-----------------------
Distributions to shareholders
Net investment income - (3,463)
Net realized gain - (7,679)
-----------------------
Decrease in net assets from distributions - (11,142)
-----------------------
Capital share transactions *
Shares sold 23,649 35,316
Distributions reinvested - 10,928
Shares redeemed (27,982) (51,301)
-----------------------
Increase (decrease) in net assets from capital
share transactions (4,333) (5,057)
-----------------------
Net Assets
Increase (decrease) during period 997 (9,608)
Beginning of period 211,730 221,338
-----------------------
End of period $ 212,727 $ 211,730
=======================
*Share information
Shares sold 1,798 2,570
Distributions reinvested - 852
Shares redeemed (2,136) (3,783)
-----------------------
Increase (decrease) in shares outstanding (338) (361)
The accompanying notes are an integral part of these financial statements.
19
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T. ROWE PRICE MID-CAP VALUE FUND
--------------------------------------------------------------------------------
Unaudited June 30, 2000
-----------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Mid-Cap Value Fund, Inc. (the fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company and commenced operations on June 28, 1996. The fund seeks long-term
capital appreciation by investing primarily in mid-sized companies that appear
to be undervalued.
The accompanying financial statements are prepared in accordance with generally
accepted accounting principles for the investment company industry; these
principles may require the use of estimates by fund management.
Valuation Equity securities listed or regularly traded on a securities exchange
are valued at the last quoted sales price on the day the valuations are made. A
security which is listed or traded on more than one exchange is valued at the
quotation on the exchange determined to be the primary market for such security.
Listed securities not traded on a particular day and securities regularly traded
in the over-the-counter market are valued at the mean of the latest bid and
asked prices. Other equity securities are valued at a price within the limits of
the latest bid and asked prices deemed by the Board of Directors, or by persons
delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and are
valued at a price deemed best to reflect fair value as quoted by dealers who
make markets in these securities or by an independent pricing service.
Investments in mutual funds are valued at the closing net asset value per share
of the mutual fund on the day of valuation.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
Currency Translation Assets and liabilities are translated into U.S. dollars at
the prevailing exchange rate at the end of the reporting period. Purchases and
sales of securities and income and expenses are translated into U.S. dollars at
the
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T. ROWE PRICE MID-CAP VALUE FUND
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prevailing exchange rate on the dates of such transactions. The effect of
changes in foreign exchange rates on realized and unrealized security gains and
losses is reflected as a component of such gains and losses.
Premiums and Discounts Premiums and discounts on debt securities are amortized
for both financial reporting and tax purposes.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Dividend income and distributions to
shareholders are recorded by the fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations and may differ from those determined in accordance with generally
accepted accounting principles. Expenses paid indirectly reflect credits earned
on daily uninvested cash balances at the custodian and are used to reduce the
fund's custody charges.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $36,257,000 and $32,164,000, respectively, for the six months ended
June 30, 2000.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income.
At June 30, 2000, the cost of investments for federal income tax purposes was
substantially the same as for financial reporting and totaled $211,403,000. Net
unrealized gain aggregated $1,431,000 at period-end, of which $34,398,000
related to appreciated investments and $32,967,000 to depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The investment management agreement between the fund and T. Rowe Price
Associates, Inc. (the manager) provides for an annual investment management fee,
of which $119,000 was payable at June 30, 2000. The fee is computed daily and
paid monthly, and consists of an individual fund fee equal to 0.35%
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T. ROWE PRICE MID-CAP VALUE FUND
--------------------------------------------------------------------------------
of average daily net assets and a group fee. The group fee is based on the
combined assets of certain mutual funds sponsored by the manager or Rowe
Price-Fleming International, Inc. (the group). The group fee rate ranges from
0.48% for the first $1 billion of assets to 0.295% for assets in excess of $120
billion. At June 30, 2000, and for the six months then ended, the effective
annual group fee rate was 0.32%. The fund pays a pro-rata share of the group fee
based on the ratio of its net assets to those of the group.
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund receives
certain other services. The manager computes the daily share price and maintains
the financial records of the fund. T. Rowe Price Services, Inc. is the fund's
transfer and dividend disbursing agent and provides shareholder and
administrative services to the fund. T. Rowe Price Retirement Plan Services,
Inc. provides subaccounting and recordkeeping services for certain retirement
accounts invested in the fund. The fund incurred expenses pursuant to these
related party agreements totaling approximately $143,000 for the six months
ended June 30, 2000, of which $29,000 was payable at period-end.
Additionally, the fund is one of several T. Rowe Price-sponsored mutual funds
(underlying funds) in which the T. Rowe Price Spectrum Funds (Spectrum) may
invest. Spectrum does not invest in the underlying funds for the purpose of
exercising management or control. Expenses associated with the operation of
Spectrum are borne by each underlying fund to the extent of estimated savings to
it and in proportion to the average daily value of its shares owned by Spectrum,
pursuant to special servicing agreements between and among Spectrum, the
underlying funds, T. Rowe Price, and, in the case of T. Rowe Price Spectrum
International, Rowe Price-Fleming International. Spectrum Growth Fund held
approximately 52.5% of the outstanding shares of the fund at June 30, 2000. For
the six months then ended, the fund was allocated $138,000 of Spectrum expenses,
$30,000 of which was payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve Funds
are offered as cash management options only to mutual funds and other accounts
managed by T. Rowe Price and its affiliates and are not available to the public.
The Reserve Funds pay no investment management fees. Distributions from the
Reserve Funds to the fund for the six months ended June 30, 2000, totaled
$179,000 and are reflected as interest income in the accompanying Statement of
Operations.
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T. ROWE PRICE SHAREHOLDER SERVICES
--------------------------------------------------------------------------------
INVESTMENT SERVICES AND INFORMATION
Knowledgeable Service Representatives
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10 p.m.
ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
Checking Available on most fixed-income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your distributions.
Automated 24-Hour Services Including Tele*Access(R) and the T. Rowe Price Web
site on the Internet. Address: www.troweprice.com
BROKERAGE SERVICES*
Individual Investments Stocks, bonds, options, precious metals, and other
securities at a savings over full-service commission rates.**
INVESTMENT INFORMATION
Combined Statement Overview of all your accounts with T. Rowe Price.
Shareholder Reports Fund managers' reviews of their strategies and results.
T. Rowe Price Report Quarterly investment newsletter discussing markets and
financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment Services,
Inc., Member NASD/SIPC.
** Based on a July 2000 survey for representative-assisted stock trades.
Services vary by firm, and commissions may vary depending on size of order.
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T. ROWE PRICE MUTUAL FUNDS
--------------------------------------------------------------------------------
STOCK FUNDS
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Tax-Efficient Growth
Total Equity Market Index
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery*
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International
BOND FUNDS
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term
Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term
Tax-Free Bond
Virginia Tax-Free Bond
International/Global
Emerging Markets Bond
Global Bond
International Bond
MONEY MARKET FUNDS+
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors.
+ Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in
the funds.
Please call for a prospectus, which contains complete information, including
fees and expenses. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY.
T. Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
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T. ROWE PRICE ADVISORY SERVICES AND RETIREMENT RESOURCES
--------------------------------------------------------------------------------
ADVISORY SERVICES, RETIREMENT RESOURCES
T. Rowe Price is your full-service retirement specialist. We have developed
unique advisory services that can help you meet the most difficult retirement
challenges. Our broad array of retirement plans is suitable for individuals, the
self-employed, small businesses, corporations, and nonprofit organizations. We
also provide recordkeeping, communications, and investment management services,
and our educational materials, self-help planning guides, and software tools are
recognized as among the industry's best. For information or to request
literature, call us at 1-800-638-5660, or visit our Web site at
www.troweprice.com.
ADVISORY SERVICES
--------------------------------------------------------------------------------
T. Rowe Price Retirement Income ManagerSM helps retirees or those within two
years of retirement determine how much income they can take in retirement. The
program uses extensive statistical analysis and the input of financial planning
professionals to suggest an income plan that best meets your objectives.
T. Rowe Price Rollover Investment Service offers asset allocation advice to
those planning a major change in their qualified retirement plans, such as a
401(k) rollover from a previous employer or an IRA transfer.
RETIREMENT RESOURCES AT T. ROWE PRICE
--------------------------------------------------------------------------------
Traditional, Roth, and Rollover IRAs
SEP-IRA and SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase
Pension and Profit Sharing Plans)
401(k) and 403(b)
457 Deferred Compensation
Planning and Informational Guides
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
Insights Reports
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
Software Packages
T. Rowe Price Retirement Planning AnalyzerTM CD-ROM or diskette $19.95. To
order, please call 1-800-541-5760. Also available on the Internet for $9.95.
T. Rowe Price Variable Annuity AnalyzerTM CD-ROM or diskette, free. To order,
please call 1-800-469-5304.
T. Rowe Price Immediate Variable Annuity (Income Account)
Investment Kits
We will be happy to send you one of our easy-to-follow investment kits when you
are ready to invest in any T. Rowe Price retirement vehicle, including IRAs,
qualified plans, small-business plans, or our no-load variable annuities.
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For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
By Account Access on the Internet
www.troweprice.com/access
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus appropriate
to the fund or funds covered in this
report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site.
Baltimore Area
Downtown
101 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
4410 ArrowsWest Drive
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
[LOGO OF T. ROWE PRICE]
T. Rowe Price Investment Services, Inc., Distributor. F15-051 6/30/00
