RPMGX PAMCX RRMGX Mid-Cap Growth Fund Mid

Transcription

ANNual
REPORT
December 31, 2012
T. Rowe Price
RPMGX
Mid-Cap Growth Fund
PAMCX
Mid-Cap Growth Fund–
Advisor Class
RRMGX
R Class
The fund invests in medium-sized growth
companies.
T. R owe P rice M id- C ap G rowth F und
HIGHLIGHTS
• A familiar drama was replayed in 2012, as stocks recovered late in the
year from worries over Europe and political wrangling in the U.S.
• The Mid-Cap Growth Fund added to its gain over the past six months
and finished roughly in the middle of its peer group for the year.
• A wide range of our holdings saw good gains for the year, led by
biotechnology positions.
• We expect the story may remain much the same in 2013, but we
are mindful that longer-term and important changes are taking
place offstage.
The views and opinions in this report were current as of December 31,
2012. 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, 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
Manager’s Letter
Fellow Shareholders
Since this drama’s premiere in 2010, it has become a somewhat tiresome
annual spectacle:
• Act I: Good earnings lead to gains early in the year!
• Act II: European debt crisis worsens, causing summer downturn!
• Act III: Washington political battles further threaten recovery!
• Act IV: Fed rides to the rescue!
Having long grown weary of the drama, many Americans continued to shun stocks
in 2012 in favor of the boredom but seeming safety of the fixed income market.
However, the dwindling number of stock investors who persevered realized solid
gains from the year’s repeat performance. While our 13.91% gain for 2012 was far
better than one might have expected given the news flow through the year, our
fund’s relative performance was unexciting. We finished roughly in the middle of our
competitive pack, enjoying a decent gain over the past six months and solid results
for the year. Overall, mid-cap growth stocks slightly trailed the broader market, as
mid-caps outperformed, but growth trailed value.
The Mid-Cap Growth Fund returned 5.79% in the past six months
and 13.91% in the year ended December 31, 2012. (Returns for
Advisor and R Class shares were lower due to their different fee
structure.) The fund modestly underperformed its Russell index over
the two periods while more substantially lagging the S&P index, which
includes some strongly performing value stocks. The fund performed a
1
bit better than its mid-cap
growth peer average,
Total Return
however, and remained
Periods Ended 12/31/12 6 Months
12 Months
favorably ranked relative
Mid-Cap Growth Fund
5.79%
13.91%
to its competitors over all
time periods—and the
top-ranked fund of its
Advisor Class
5.65
13.62
kind since its inception in
1992. (Based on cumulaR Class
5.49
13.31
tive total return, Lipper
S&P MidCap 400 Index 9.25
17.88
ranked the Mid-Cap
Russell Midcap Growth Index 7.13
15.81
Growth Fund 192 of 392,
73 of 350, 43 of 318, 11
Lipper Mid-Cap Growth
Funds Index
5.24
13.36
of 220, and 1 of 29 funds
in the mid-cap growth
funds category for the 1-,
3-, 5-, and 10-year and since-inception periods ended December 31,
2012, respectively. Past performance cannot guarantee future results.)
P erformance C omparison
When we last wrote, the market had managed a decent gain in the first
half of the year despite a global economy that appeared to be slowing,
a debt crisis in Europe that had grown worse, and a political situation
in the U.S. that was in shambles. Stocks built on their gains in the
second half of the year as these obstacles moderated. U.S. economic
growth picked up in the third quarter, and more visibly to most
Americans, the pace of job growth accelerated. By the end of the year,
it became clear that the housing sector had finally engineered a solid
turnaround, and consumer confidence gauges were climbing back
to multiyear highs. China, a key world growth engine following the
Great Recession, appeared to be settling into a pattern of slower but
sustainable growth. European economies continued to founder, but the
Continent’s debt crisis eased following a new rescue program from the
European Central Bank. Politicians in the U.S. managed to avoid going
over the fiscal cliff or shutting down the federal government, which,
we surmise, counts as progress in this highly polarized age.
G rowth vs. V alue
Periods Ended 12/31/12
6 Months
12 Months
3 Years
5 Years
Russell Midcap Growth Index
7.13%
15.81%
43.94%
17.24%
Russell Midcap Value Index
9.95
18.51
45.79
20.44
Cumulative returns.
2
“Never fear, the Fed is here!” one observer recently quipped. While
the Lone Ranger did not necessarily ride to investors’ rescue in 2012,
he certainly made them feel better. In September, the broad market
indexes reached multiyear highs and the S&P MidCap 400 established
a new record after the Federal Reserve announced a third round of
quantitative easing (more commonly called QE3). In what was widely
interpreted as a victory for the “doves”—or those Fed officials willing
to accept the risk of higher inflation in order to bring down the
unemployment rate—the central bank announced that it would begin
buying $40 billion of agency mortgage-backed securities each month.
In December, the Fed went further by announcing that it would begin
purchasing $45 billion in Treasury bonds each month starting in 2013
and surprised most observers by setting specific targets for the unemployment rate and inflation—6.5% and 2.5%, respectively—before it
would begin raising short-term interest rates. Thus, QE4 followed on
QE3, meaning that the Fed was introducing new stimulus measures
even faster than Apple could update its iPad. Stocks went on to finish
the year on a high note, boosted further by a last-minute budget deal
in Washington.
PORTFOLIO REVIEW
A broad range of the fund’s holdings advanced over the year, with
eight of nine sectors contributing to gains. Biotechnology remains a key
focus of the fund and was our leading industry contributor. Our single
largest contributor was Regeneron Pharmaceuticals, a biotechnology
company with an FDA-approved treatment for wet age-related macular
degeneration, a widespread cause of blindness in the elderly. Investors’
enthusiasm for the drug increased after a competing product fell under
a cloud of controversy surrounding compounding pharmacies. Another
strong contributor was Alexion Pharmaceuticals, whose drug, Soliris,
developed to treat a life threatening blood disease, showed potential to
treat other serious illnesses. The company is also expected to bring to
market a treatment for a genetic deficiency affecting infants and young
children. Our portfolio is diversified across the biotech segment, ending
the year with 11 such holdings, as the success or failure of any one
drug can make or break a company. (Please refer to the fund’s portfolio
of investments for a complete list of our holdings and the amount each
represents in the portfolio.)
Several of our other health care holdings also performed well. One of
our top contributors was Catamaran, formerly SXC Health Solutions,
a pharmacy benefit manager that acquired a key competitor to create
the fourth-largest player in its industry. Over the past six months,
3
we also added to Agilent Technologies, a high-quality analytical
instrument company with substantial exposure to emerging markets;
we initiated a position in Wellcare Health Plans, a large Medicaid
managed care company; and we eliminated our position
in Amerigroup following an acquisition offer at a large
We believe select premium. We believe select health care services firms are
health care poised to do well given their technological advantages
and the imperative to improve health care productivity.
services firms Boasting a large number of attractively valued and
responsibly managed growth companies, the industrials
well given their and business services sector continued to be a key driver
of our results. After poor performance early in the year,
technological one of our leading contributors over the past six months
advantages and was Gardner Denver, as investors welcomed the firm’s
solicitation of acquisition offers and the subsequent
the imperative to news reports indicating that private-equity firms and
improve health
others had expressed interest in the company. Longterm holding AMETEK, an electrical equipment maker,
care productivity.
also performed well. Over the past six months, we
added to our position in J.B. Hunt Transport Services,
which is benefiting from its growing intermodal business. We initiated
positions in Equifax, a data provider for consumers and businesses
benefiting from an increase in lending activity, and Alaska Air Group,
a well-managed and growing airline. As usual, our valuation-sensitive
approach led us to trim some of our winners, such as longtime
holding Roper Industries.
are poised to do Information technology remains an important sector for the fund.
Trimble Navigation reported impressive earnings gains as adoption
of its technology accelerated. This global provider of advanced
positioning and location-based solutions is evolving into a more
comprehensive platform with its ongoing shift to software and services.
In the second half of the year, we initiated positions in Motorola
Solutions, a purveyor of communications products and services for
first responders and mobile workers; LinkedIn, the world’s largest
professional social network; and ServiceNow, a leading IT management software provider. Conversely, we eliminated Ariba as it was
acquired by SAP and trimmed Global Payments due to increasing
competitive risks. A notable detractor in the technology sector was
Atmel, which has a high-margin and broad-based microcontroller
business as well as a solid position in the booming market for touchbased controllers for devices such as smartphones and tablets. While
4
its shares have been under pressure due to increased competition in
touch-based technologies, we believe the market has overcompensated
for the competitive risks in that segment.
The materials sector is only a small part of the fund, given its limited
growth opportunities, but two of our best contributors came from
the segment. Franco-Nevada, a gold-focused royalty and investment
company that provides capital to mining companies in exchange
for royalties on future
S ector D iversification
sales or production,
announced a significant
Percent of Net Assets
investment in a poten
6/30/12 12/31/12
tially lucrative project
Industrials and
in Panama. In 2011,
Business Services
21.9%
23.5%
gold miner Agnico-Eagle
Information Technology
21.9
21.0
Mines missed earnings
Health Care
18.0
19.2
due to operational
issues, but the shares
Consumer Discretionary
13.6
14.1
rebounded in 2012
Financials
6.9
6.8
after the firm rectified
Energy
6.2
5.6
these shortcomings.
Materials
2.9
3.5
Consumer Staples
1.5
1.9
In past letters, we have
reported our growing
Utilities
1.3
1.4
skepticism about
valuations in the consumer
Other and Reserves
5.8
3.0
discretionary sector,
Total
100.0%
100.0%
where momentum-chasing
Historical weightings reflect current industry/sector
investors have bid up the
classifications.
shares of a small group of
fast-growing companies.
We sense that this momentum might have peaked in recent months,
but our relative returns suffered somewhat due both to our stock
selection and our underweight in the sector. Our biggest mistakes in
the segment were owning LivingSocial and Groupon. We purchased
shares of LivingSocial as a private placement and later bought Groupon
well after the sheen had worn off its initial public offering. While we
thought that the reduced price we paid for Groupon provided us an
adequate cushion for disappointment, the stock fared poorly as the
business model proved far less durable than we thought. We eliminated Groupon and greatly marked down our LivingSocial position.
Another of our private holdings, Michael Kors Holdings, went public
in late 2011 and was one of our largest contributors in 2012 as its
products appealed to fashion-conscious consumers. Discount retailer
5
Dollar General also performed well, appealing to empty-nesters and
low-income shoppers who increasingly want smaller package sizes and
less intimidating stores with convenient parking. We added Dollar
Tree to the portfolio as well.
We have little positive to report about the stock performance of the
energy sector this year. The massive increase in natural gas production
as a result of fracking and other unconventional drilling processes
has weighed heavily on both natural gas and coal prices, as have
unseasonably warm winters. Trican Well Service, which we eliminated from the portfolio, and SM Energy were among our largest
detractors, but the majority of our holdings in the sector detracted from
results. Ironically, the pain currently being felt by energy producers
is probably setting the stage for strong performance in the coming
years from other fund holdings, particularly in the industrials sector.
As we have previously described, reliable and cheap domestic energy
is already encouraging firms to relocate production back to the U.S.,
sparking what could evolve into an American industrial renaissance.
INVESTMENT STRATEGY AND OUTLOOK
We doubt that our annual market spectacle will get much of a revamp
in 2013. Certainly, the cast of characters has not changed much, with
the recent elections having preserved the status quo in Washington.
Given the ongoing battles over fiscal issues, the nation’s political class
appears unlikely to do much to stimulate growth in 2013, although
we suspect that the economy might be poised for a solid recovery if
policymakers somehow manage to pull the correct levers. Instead, the
ongoing political gridlock and strident partisanship in Washington
appear to leave us poised for a series of ongoing mini-crises in the
coming quarters.
The Federal Reserve’s role as Lone Ranger might be altered a bit,
however. Recent signs suggest that at least some in the Fed are
growing wary of its massive bond purchases, and it is unclear whether
more monetary stimulus will have much of an effect. It will be up to
historians to determine whether several years of zero interest rates and
6
massive quantitative easing have been necessary to boost growth and
push investors into riskier assets. At this point, however, we suspect
a moderate and controlled upward drift in interest
rates would be good for the economy and for the
…most of the stock market.
important drama Finally, we would note that most of the important
drama has been taking place offstage, as is so often the
has been taking case. The impressive turnaround in domestic energy
place offstage,
production, the rise of industrial automation, and the
related rebirth of American manufacturing will probably
as is so often
prove to be much more consequential stories over the
the case.
long run, even if they receive relatively short shrift in
the financial press. We are confident that many of our
holdings will play leading roles within many of these trends, and we
look forward to updating you on their performance in six months.
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 22, 2013
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.
7
R isks of S tock I nvesting
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.
G lossary
Lipper indexes: Fund benchmarks that consist of a small number of the largest mutual
funds in a particular category as tracked by Lipper Inc.
Russell Midcap Growth Index: An unmanaged index that measures the performance of
those Russell Midcap companies with higher price-to-book ratios and higher forecast
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 forecast
growth values.
S&P MidCap 400 Index: An unmanaged index that tracks the stocks of 400 U.S.
mid-cap companies.
Note: Russell Investment Group is the source and owner of the trademarks, service marks, and
copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
8
P ortfolio H ighlights
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
12/31/12
AMETEK DENTSPLY International
IHS Roper Industries
Fiserv
1.9%
1.8
1.7
1.5
1.5
Gartner
Trimble Navigation
CarMax
Quanta Services
Calpine
1.5
1.5
1.5
1.5
1.4
Textron
Gardner Denver
Fastenal
Dollar General
Laboratory Corporation of America
1.4
1.4
1.4
1.3
1.3
Catamaran
Pall Amdocs
JDS Uniphase
IDEX
1.3
1.3
1.2
1.2
1.2
EQT Marriott
Range Resources
ManpowerGroup
Babcock & Wilcox
1.1
1.1
1.1
1.1
1.1
Total
34.3%
Note: The information shown does not reflect any exchange-traded funds (ETFs), cash
reserves, or collateral for securities lending that may be held in the portfolio.
9
P ortfolio H ighlights
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE
Six Months Ended 12/31/12
Best Contributors
CarMax
Regeneron Pharmaceuticals Trimble Navigation Gardner Denver Workday
Agnico-Eagle Mines Roper Industries
AMETEK JDS Uniphase Rackspace Hosting
Total
Worst Contributors
25¢
24
20
18
18
14
14
14
13
12
172¢
Dollar General
LivingSocial
IHS
Groupon**
Elan Tibco Software
Spirit AeroSystems**
Marvell Technology Group**
Informatica** Micros Systems Total
-19¢
-14
-12
-11
-10
-10
-9
-8
-8
-7
-108¢
12 Months Ended 12/31/12
Best Contributors
Regeneron Pharmaceuticals AMETEK
Catamaran Michael Kors Holdings Roper Industries
Trimble Navigation Gartner Textron Fiserv Ariba**
Total
*Position added.
**Position eliminated.
***Position eliminated and added.
10
Worst Contributors
69¢
33
29
27
26
25
21
21
21
19
291¢
LivingSocial
Marvell Technology Group**
Deckers Outdoor*** SM Energy Groupon***
Allscripts Healthcare Solutions**
Gardner Denver Gentex*
Atmel Trican Well Service**
Total
-21¢
-16
-12
-11
-10
-9
-9
-8
-8
-8
-112¢
Performance and Expenses
G rowth of $10,000
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.
MID-CAP GROWTH FUND
As of 12/31/12
$40,000
Mid-Cap Growth Fund $29,841
34,000
S&P MidCap 400 Index $27,220
28,000
Lipper Mid-Cap Growth Funds
Index $24,562
22,000
16,000
10,000
12/02
12/03
12/04
12/05
12/06
12/07
12/08
12/09
12/10
12/11
12/12
Note: Performance for the Advisor and R Classes will vary due to their differing fee structures.
A verage A nnual C ompound T otal R eturn
Periods Ended 12/31/12
1 Year
5 Years
10 Years
Mid-Cap Growth Fund
13.91%
4.80%
11.55%
Advisor Class
13.62
4.57
11.30
R Class
13.31
4.28
11.01
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, please contact a T. Rowe Price representative at 1-800-225-5132, or for Advisor
and R Class shares, 1-800-638-8790.
This table shows how the fund would have performed each year if its actual (or cumulative)
returns had been earned at a constant rate. 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.
11
E xpense R atio
Mid-Cap Growth Fund
0.80%
Mid-Cap Growth Fund–Advisor Class
1.05
Mid-Cap Growth Fund–R Class
1.31
The expense ratio shown is as of the fund’s fiscal year ended 12/31/11. This number
may vary from the expense ratio shown elsewhere in this report because it is based on a
different time period and, if applicable, does not include fee or expense waivers.
F und E xpense E xample
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, and 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 on this line,
together with your account balance, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value divided
by $1,000 = 8.6), then multiply the result by the number on the first line under the heading
“Expenses Paid During Period” to estimate the expenses you paid on your account during
this period.
Hypothetical Example for Comparison Purposes
The information on the second line of the table (Hypothetical) is based on hypothetical
account values and expenses derived from the fund’s actual expense ratio and an assumed
5% per year rate of return before expenses (not the fund’s actual return). You may compare
the ongoing costs of investing in 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.
12
F und E xpense E xample ( continued )
Note: T. Rowe Price charges an annual account service fee of $20, generally for accounts
with less than $10,000. The fee is waived for any investor whose T. Rowe Price mutual fund
accounts total $50,000 or more; accounts electing to receive electronic delivery of account
statements, transaction confirmations, prospectuses, and shareholder reports; or accounts
of an investor who is a T. Rowe Price Preferred Services, Personal Services, or Enhanced
Personal Services client (enrollment in these programs generally requires T. Rowe Price
assets of at least $100,000). 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.
M id- C ap G rowth F und
Beginning
Account Value
7/1/12
Ending Account Value
12/31/12
Expenses Paid
During Period*
7/1/12 to 12/31/12
$1,000.00 $1,057.90
$4.09
Hypothetical (assumes 5%
return before expenses)
1,000.00 1,021.17
4.01
Advisor Class
Actual
1,000.00 1,056.50 5.38
1,000.00 1,019.91
5.28
R Class
Actual
1,000.00
1,054.90
6.82
1,000.00
1,018.50
6.70
Investor Class
Actual
*Expenses are equal to the fund’s annualized expense ratio for the 6-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), and divided by the days in the year (366)
to reflect the half-year period. The annualized expense ratio of the Investor Class was
0.79%, the Advisor Class was 1.04%, and the R Class was 1.32%.
13
F inancial H ighlights
For a share outstanding throughout each period
Investor Class
Year
Ended
12/31/12 12/31/11 12/31/10 12/31/09 12/31/08
NET ASSET VALUE
Beginning of period
$ 52.73
$ 58.53
$ 47.49
$ 32.67
$ 57.67
Investment activities
Net investment income (loss)
(1)
Net realized and unrealized
gain (loss)
Total from investment activities
Distributions
Net realized gain
0.01
(0.20)
(0.06)
(0.10)
(0.14)
7.27
7.28
(0.71)
(0.91)
13.37
13.31
14.95
14.85
(22.87)
(23.01)
(3.54)
(4.89)
(2.27)
(0.03)
(1.99)
NET ASSET VALUE
End of period
$ 56.47
$ 52.73
$ 58.53
$ 47.49
$ 32.67
13.91%
(1.21)%
28.06%
45.44%
(39.69)%
0.80%
0.80%
0.80%
0.83%
0.82%
Ratios/Supplemental Data
(2)
Total return
Ratio of total expenses to average
net assets
Ratio of net investment income
(loss) to average net assets
Portfolio turnover rate
Net assets, end of period
(in millions)
0.02%
29.6%
(0.34)%
(0.12)%
(0.26)%
(0.28)%
30.6%
30.1%
30.7%
32.7%
$ 16,860 $ 16,308 $ 18,951 $ 14,664 $ 9,405
(1)
Per share amounts calculated using average shares outstanding method.
(2)
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.
14
Advisor Class
Year
Ended
12/31/12 12/31/11 12/31/10 12/31/09 12/31/08
NET ASSET VALUE
Beginning of period
$ 51.72
$ 57.47
$ 46.77
$ 32.24
$ 57.07
Net investment loss
(1)
gain (loss)
Distributions
Net realized gain
(0.13)
(0.34)
(0.18)
(0.18)
(0.23)
7.12
6.99
(0.68)
(1.02)
13.15
12.97
14.74
14.56
(22.61)
(22.84)
(3.39)
(4.73)
(2.27)
(0.03)
(1.99)
NET ASSET VALUE
End of period
$ 55.32
$ 51.72
$ 57.47
$ 46.77
$ 32.24
13.62%
(1.43)%
27.77%
45.15%
(39.81)%
1.04%
1.04%
1.03%
1.04%
1.02%
(2)
Total return
net assets
Ratio of net investment (loss) to
average net assets
(0.23)%
(0.58)%
(0.34)%
(0.46)%
(0.49)%
29.6%
30.6%
30.1%
30.7%
32.7%
(in millions)
$
912
$
951
$ 1,084
$
650
$
343
(1)
(2)
15
R Class
Year
Ended
12/31/12 12/31/11 12/31/10 12/31/09 12/31/08
NET ASSET VALUE
Beginning of period
$ 50.85
$ 56.57
$ 46.19
$ 31.92
$ 56.69
Net investment loss
(1)
gain (loss)
Distributions
Net realized gain
(0.28)
(0.49)
(0.32)
(0.27)
(0.35)
7.00
6.72
(0.67)
(1.16)
12.97
12.65
14.57
14.30
(22.43)
(22.78)
(3.22)
(4.56)
(2.27)
(0.03)
(1.99)
NET ASSET VALUE
End of period
$ 54.35
$ 50.85
$ 56.57
$ 46.19
$ 31.92
13.31%
(1.72)%
27.43%
44.79%
(39.97)%
1.31%
1.31%
1.32%
1.29%
1.27%
(2)
Total return
net assets
Ratio of net investment (loss) to
average net assets
(0.51)%
(0.85)%
(0.63)%
(0.71)%
(0.74)%
29.6%
30.6%
30.1%
30.7%
32.7%
(in thousands)
$ 242,722 $ 261,125 $ 296,134 $ 180,794 $ 100,718
(1)
(2)
16
December 31, 2012
P ortfolio of I nvestments
‡
SharesValue
(Cost and value in $000s)
COMMON STOCKS 96.7%
CONSUMER DISCRETIONARY 14.0%
Auto Components 0.5%
Gentex
5,250,000
98,805
98,805
Automobiles 0.8%
Harley-Davidson
Tesla Motors (1)
2,500,000
122,100
600,000
20,322
142,422
Hotels, Restaurants & Leisure 3.4%
Chipotle Mexican Grill (1)
225,000
66,929
Choice Hotels International
2,550,000
85,731
Marriott, Class A
5,500,000
204,985
Panera Bread, Class A (1)
550,000
87,356
Starbucks
750,000
40,215
2,500,000
122,950
Tim Hortons
608,166
Internet & Catalog Retail 1.3%
Liberty Interactive (1)
Netflix (1)
TripAdvisor (1)
4,442,000
87,419
750,000
69,585
2,000,000
83,920
240,924
Media 1.4%
Charter Communications, Class A (1)
2,100,000
160,104
Discovery Communications, Class C (1)
1,500,000
87,750
247,854
Multiline Retail 2.9%
Dollar General (1)
5,500,000
242,495
Dollar Tree (1)
2,998,100
121,603
Kohl's
3,500,000
150,430
514,528
17
SharesValue
Specialty Retail 3.4%
AutoZone (1)
CarMax (1)
DSW, Class A
O'Reilly Automotive (1)
500,000
177,215
7,000,000
262,780
386,945
25,418
1,750,000
156,485
621,898
Textiles, Apparel & Luxury Goods 0.3%
Michael Kors Holdings (1)
1,000,000
51,030
51,030
2,525,627
Total Consumer Discretionary
CONSUMER STAPLES 1.9%
Food & Staples Retailing 1.3%
Fresh Market (1)
Shoppers Drug Mart (CAD)
Whole Foods Market
750,000
36,068
3,000,000
129,084
750,000
68,497
233,649
Food Products 0.6%
Treehouse Foods (1)(2)
2,000,000
104,260
104,260
337,909
Total Consumer Staples
ENERGY 5.6%
Oil, Gas & Consumable Fuels 5.6%
CONSOL Energy
1,917,000
61,536
EQT
3,500,000
206,430
Halcon Resources (1)
5,000,000
34,600
Laredo Petroleum Holdings (1)
2,750,000
49,940
Pioneer Natural Resources
1,000,000
106,590
Range Resources
3,250,000
204,197
18
SharesValue
SM Energy (2)
3,500,000
182,735
Southwestern Energy (1)
4,750,000
158,698
1,004,726
Total Energy
FINANCIALS 6.8%
Capital Markets 1.3%
Charles Schwab
5,806,200
83,377
TD Ameritrade Holding
8,500,000
142,885
226,262
Commercial Banks 1.0%
BankUnited
3,050,000
74,542
TCF Financial (2)
8,250,000
100,238
174,780
Diversified Financial Services 1.9%
CBOE Holdings
IntercontinentalExchange (1)
MSCI, Class A (1)
4,000,000
117,840
399,800
49,499
5,900,000
182,841
350,180
Insurance 2.1%
HCC Insurance Holdings
3,750,000
139,537
Progressive
6,500,000
137,150
Willis Group Holdings
3,000,000
100,590
377,277
Real Estate Management & Development 0.5%
Jones Lang LaSalle
1,152,200
96,716
96,716
1,225,215
Total Financials
19
SharesValue
HEALTH CARE 19.2%
Biotechnology 4.0%
Alexion Pharmaceuticals (1)
1,500,000
140,715
Alkermes (1)
5,000,000
92,600
Ariad Pharmaceuticals (1)
2,250,000
43,155
Cubist Pharmaceuticals (1)
1,000,000
42,060
Elan, ADR (1)
7,673,200
78,343
Incyte (1)
2,250,000
37,372
ONYX Pharmaceuticals (1)
1,000,000
75,530
Pharmacyclics (1)
325,000
18,818
Regeneron Pharmaceuticals (1)
800,000
136,856
2,880,400
64,147
Theravance (1)
729,596
Health Care Equipment & Supplies 6.0%
C. R. Bard
1,750,000
171,045
CareFusion (1)
6,250,000
178,625
Cooper Companies
1,200,000
110,976
DENTSPLY International (2)
8,000,000
316,880
Edwards Lifesciences (1)
1,332,400
120,142
IDEXX Laboratories (1)
1,920,400
178,213
1,075,881
Health Care Providers & Services 5.2%
Catamaran (1)
5,000,000
235,550
Henry Schein (1)
2,000,000
160,920
Laboratory Corporation of America (1)
2,750,000
238,205
MEDNAX (1)
1,500,000
119,280
Universal Health Services
2,399,200
116,001
Wellcare Health Plans (1)
1,250,000
60,863
930,819
Life Sciences Tools & Services 3.1%
Agilent Technologies
20
4,000,000
163,760
SharesValue
Bruker (1)
7,250,000
110,707
Covance (1)(2)
3,400,000
196,418
Illumina (1)
1,000,000
55,590
225,000
43,493
Mettler-Toledo International (1)
569,968
Pharmaceuticals 0.9%
Hospira (1)
1,250,000
39,050
Valeant Pharmaceuticals International (1)
2,000,000
119,540
158,590
3,464,854
Total Health Care
INDUSTRIALS & BUSINESS SERVICES 23.5%
Aerospace & Defense 1.4%
Textron
10,075,900
249,781
249,781
Airlines 0.4%
Alaska Air Group (1)
1,500,000
64,635
64,635
Commercial Services & Supplies 2.8%
Clean Harbors (1)
1,500,000
82,515
IHS (1)
3,200,000
307,200
Waste Connections
3,500,000
118,265
507,980
Construction & Engineering 1.4%
Quanta Services (1)
9,596,700
261,894
261,894
Electrical Equipment 5.0%
Acuity Brands
1,372,600
92,966
AMETEK
9,000,000
338,130
21
SharesValue
Babcock & Wilcox (2)
7,604,800
199,246
Roper Industries
2,500,000
278,700
909,042
Industrial Conglomerates 0.8%
McDermott International (1)(2)
12,500,000
137,750
137,750
Machinery 5.4%
Colfax (1)
2,150,000
86,752
Gardner Denver (2)
3,599,400
246,559
IDEX (2)
4,500,000
209,385
Pall
3,841,000
231,459
Rexnord (1)
1,582,000
33,697
WABCO Holdings (1)
2,500,000
162,975
970,827
Professional Services 2.7%
Equifax
2,500,000
135,300
ManpowerGroup (2)
4,750,000
201,590
Verisk Analytics, Class A (1)
2,878,600
146,809
483,699
Road & Rail 2.1%
Hertz Global Holdings (1)
7,500,000
122,025
J.B. Hunt Transport Services
2,000,000
119,420
Kansas City Southern Industries
1,600,000
133,568
375,013
Trading Companies & Distributors 1.5%
Air Lease (1)
Fastenal
933,113
20,062
5,250,000
245,122
265,184
Total Industrials & Business Services
22
4,225,805
SharesValue
INFORMATION TECHNOLOGY 20.8%
Communications Equipment 2.5%
Aruba Networks (1)
1,998,800
41,475
JDS Uniphase (1)(2)
16,000,000
216,640
Motorola Solutions
3,500,000
194,880
452,995
Computers & Peripherals 0.4%
SanDisk (1)
1,750,000
76,230
76,230
Electronic Equipment, Instruments & Components 1.6%
IPG Photonics
Trimble Navigation (1)
250,000
16,663
4,500,000
269,010
285,673
Internet Software & Services 1.2%
Akamai Technologies (1)
2,250,000
92,047
Dropbox, Acquisition Date: 5/1/12
Acquisition Cost $3,992 (1)(3)
441,181
3,393
LinkedIn (1)
325,000
37,317
Rackspace Hosting (1)
1,000,000
74,270
207,027
IT Services 5.4%
Amdocs
6,500,000
220,935
Fiserv (1)
3,500,000
276,605
Gartner (1)
6,004,000
276,304
Global Payments
2,750,000
124,575
Vantiv, Class A (1)
3,800,491
77,606
976,025
Semiconductor & Semiconductor Equipment 4.4%
Altera
Atmel (1)
23
3,000,000
103,320
18,000,000
117,900
SharesValue
Avago Technologies
2,000,000
63,320
Cree (1)
2,500,000
84,950
Intersil Holding, Class A
2,250,000
18,653
Microchip Technology
3,000,000
97,770
NVIDIA
3,500,000
43,015
Silicon Laboratories (1)
2,000,000
83,620
Xilinx
5,000,000
179,500
792,048
Software 5.3%
Concur Technologies (1)
2,000,000
135,040
FactSet Research Systems
1,500,000
132,090
MICROS Systems (1)
1,850,000
78,514
Nuance Communications (1)
7,250,000
161,820
Red Hat (1)
3,750,000
198,600
ServiceNow (1)
2,350,000
70,570
TIBCO Software (1)
4,000,000
88,040
Workday (1)
924,600
50,391
Workday, Class B, Acquisition Date: 10/13/11 – 9/28/12
813,385
42,113
957,178
3,747,176
Total Information Technology
MATERIALS 3.5%
Chemicals 1.2%
Celanese, Class A
2,250,000
100,192
Rockwood Holdings
2,550,000
126,123
226,315
Containers & Packaging 0.3%
Ball
1,075,000
48,106
48,106
24
SharesValue
Metals & Mining 2.0%
Agnico-Eagle Mines
3,500,000
183,610
Franco-Nevada (CAD)
3,000,000
171,248
354,858
629,279
Total Materials
UTILITIES 1.4%
Independent Power Producers & Energy Traders 1.4%
Calpine (1)
14,394,700
260,976
260,976
Total Utilities
17,421,567
Total Common Stocks (Cost $12,980,964)
CONVERTIBLE PREFERRED STOCKS 0.3%
CONSUMER DISCRETIONARY 0.1%
Internet & Catalog Retail 0.1%
coupons.com, Acquisition Date: 6/1/11
7,631,664
20,892
20,892
Total Consumer Discretionary
INFORMATION TECHNOLOGY 0.2%
Internet Software & Services 0.2%
Dropbox, Class A, Acquisition Date: 5/1/12
581,600
4,473
Dropbox, Class A-1, Acquisition Date: 5/1/12
2,884,077
22,184
LivingSocial, Acquisition Date: 4/1/11
9,229,900
2,861
Total Information Technology
29,518
Total Convertible Preferred Stocks (Cost $125,442)
50,410
25
SharesValue
SHORT-TERM INVESTMENTS 3.1%
Money Market Funds 3.1%
T. Rowe Price Government Reserve
Investment Fund, 0.11% (2)(4)
568,449,819
568,450
568,450
Total Short-Term Investments (Cost $568,450)
Total Investments in Securities
100.1% of Net Assets (Cost $13,674,856)
‡
(1)
(2)
(3)
$
18,040,427
Denominated in U.S. dollars unless otherwise noted.
Non-income producing
Affiliated Companies
Security cannot be offered for public resale without first being registered
under the Securities Act of 1933 and related rules ("restricted security").
Acquisition date represents the day on which an enforceable right to acquire
such security is obtained and is presented along with related cost in the
security description. The fund has registration rights for certain restricted
securities. Any costs related to such registration are borne by the issuer. The
aggregate value of restricted securities (excluding 144A holdings) at periodend amounts to $95,916 and represents 0.5% of net assets.
(4) Seven-day yield
ADR American Depository Receipts
CAD Canadian Dollar
26
Affiliated Companies
($000s)
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, or a company which is under common ownership or control. Based on the fund’s relative
ownership, the following securities were considered affiliated companies for all or some portion of
the year ended December 31, 2012. Purchase and sales cost and investment income reflect all
activity for the period then ended.
Purchase
Cost
Affiliate
Babcock & Wilcox
Concur Technologies
Covance
DENTSPLY International
Gardner Denver
Global Payments
IDEX
IHS
Intersil Holding, Class A
JDS Uniphase
ManpowerGroup
McDermott International
MSCI, Class A
Silicon Laboratories
SM Energy
TCF Financial
Treehouse Foods
27
$
2,144 $
3,337
3,651
42,510
30,247
2,889
2,352
3,556
917
19,656
18,469
1,981
19,983
7,768
78,609
4,659
106,117
Sales
Cost
3,659 $
41,310
33,837
10,810
5,731
101,993
11,021
7,307
84,651
2,558
6,745
3,197
17,602
52,035
3,934
4,028
98
Investment
Income
609 $
—
—
1,621
715
321
3,526
—
2,436
—
4,006
—
—
—
272
1,651
—
Value
12/31/12
199,246 $
*
196,418
316,880
246,559
*
209,385
*
*
216,640
201,590
137,750
*
*
182,735
100,238
104,260
Value
12/31/11
191,310
139,672
182,880
253,678
258,151
248,745
176,272
288,636
83,520
156,600
160,875
149,630
197,580
130,260
*
85,140
—
Affiliated Companies (continued)
($000s)
Affiliate
T. Rowe Price
Government Reserve
Investment Fund, 0.11%
Purchase
Cost
Sales
Cost
Investment
Income
Value
12/31/12
Value
12/31/11
¤
¤
860
568,450
655,369
Totals
$
16,017 $ 2,680,151 $ 3,358,318
* On the date indicated, issuer was held but not considered an affiliated company
¤ Purchase and sale information not shown for cash management funds.
Amounts reflected on the accompanying financial statements include the
following amounts related to affiliated companies:
Investment in securities, at cost
$ 2,457,330
Dividend income
Interest income
16,017
—
Investment income
$
16,017
Realized gain (loss) on securities
$
40,522
Capital gain distributions from
mutual funds
$
—
28
December 31, 2012
S tatement of A ssets and L iabilities
($000s, except shares and per share amounts)
Assets
Investments in securities, at value (cost $13,674,856)
$ 18,040,427
Receivable for investment securities sold
82,463
Receivable for shares sold
21,783
Dividends receivable
4,903
Other assets
88
Total assets
18,149,664
Liabilities
Payable for shares redeemed
99,048
Payable for investment securities purchased
22,089
Investment management fees payable
9,761
Due to affiliates
1,494
Other liabilities
2,045
Total liabilities
134,437
NET ASSETS
$ 18,015,227
Net Assets Consist of:
Accumulated undistributed net realized loss
$
Net unrealized gain
Paid-in capital applicable to 319,548,812 shares of $0.01 par value
capital stock outstanding; 1,000,000,000 shares authorized
NET ASSETS
(109,389)
4,365,570
13,759,046
$ 18,015,227
NET ASSET VALUE PER SHARE
Investor Class
($16,860,061,187 / 298,589,243 shares outstanding)
$
56.47
Advisor Class
($912,443,473 / 16,493,863 shares outstanding)
$
55.32
R Class
($242,721,927 / 4,465,706 shares outstanding)
$
54.35
29
S tatement of O perations
($000s)
Year
Ended
12/31/12
Investment Income (Loss)
Income
Dividend
Securities lending
Interest
$
Total income
Expenses
Investment management
Shareholder servicing
Investor Class
Advisor Class
R Class
Rule 12b-1 fees
Advisor Class
R Class
Prospectus and shareholder reports
Investor Class
Advisor Class
R Class
Custody and accounting
Registration
Legal and audit
Directors
Miscellaneous
148,124
941
4
149,069
116,777
$
25,367
1,431
428
27,226
2,284
1,314
3,598
682
43
14
739
562
155
71
48
98
Total expenses
Expenses paid indirectly
149,274
(3)
Net expenses
149,271
Net investment loss
30
(202)
S tatement of O perations
($000s)
Year
Ended
12/31/12
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities
Foreign currency transactions
Net realized gain
Change in net unrealized gain (loss)
Securities
Other assets and liabilities denominated in foreign currencies
1,662,665
(261)
1,662,404
712,150
(5)
712,145
Net realized and unrealized gain (loss)
2,374,549
INCREASE IN NET ASSETS FROM OPERATIONS
31
$ 2,374,347
S tatement of C hanges in N et A ssets
($000s)
Year
Ended
12/31/12
12/31/11
Increase (Decrease) in Net Assets
Operations
Net investment loss
Net realized gain
Increase (decrease) in net assets from
operations
$
(202)
1,662,404
712,145
$
2,374,347
Distributions to shareholders
Net realized gain
Investor Class
Advisor Class
R Class
Decrease in net assets from distributions
Capital share transactions*
Shares sold
Investor Class
Advisor Class
R Class
Distributions reinvested
Investor Class
Advisor Class
R Class
Shares redeemed
Investor Class
Advisor Class
R Class
Decrease in net assets from capital share
transactions
(70,158)
2,283,157
(2,407,667)
(194,668)
(1,008,177)
(52,990)
(13,765)
(1,074,932)
(1,395,477)
(81,136)
(21,528)
(1,498,141)
2,099,656
182,312
40,797
2,581,016
276,927
66,126
971,671
49,259
13,764
1,330,346
74,078
21,526
(3,730,868)
(339,489)
(91,796)
(4,985,000)
(385,660)
(96,414)
(804,694)
(1,117,055)
Net Assets
Increase (decrease) during period
Beginning of period
End of period
Undistributed net investment income
32
494,721
17,520,506
$
18,015,227
–
(2,809,864)
20,330,370
$
17,520,506
–
S tatement of C hanges in N et A ssets
(000s)
*Share information
Shares sold
Investor Class
Advisor Class
R Class
Distributions reinvested
Investor Class
Advisor Class
R Class
Shares redeemed
Investor Class
Advisor Class
R Class
Decrease in shares outstanding
33
Year
Ended
12/31/12
12/31/11
36,578
3,227
737
43,165
4,717
1,149
17,482
904
257
26,276
1,492
441
(64,725)
(6,033)
(1,663)
(13,236)
(83,943)
(6,667)
(1,690)
(15,060)
December 31, 2012
N otes to F inancial S tatements
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; the Mid-Cap Growth Fund–Advisor Class (Advisor
Class), offered since March 31, 2000; and the 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.
Note 1 - Significant Accounting Policies
Basis of Preparation The accompanying financial statements were prepared in
accordance with accounting principles generally accepted in the United States
of America (GAAP), which require the use of estimates made by management.
Management believes that estimates and valuations are appropriate; however,
actual results may differ from those estimates, and the valuations reflected in
the accompanying financial statements may differ from the value ultimately
realized upon sale or maturity.
Investment Transactions, Investment Income, and Distributions Income and
expenses are recorded on the accrual basis. 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. Income tax-related interest and penalties,
if incurred, would be recorded as income tax expense. Investment transactions
are accounted for on the trade date. Realized gains and losses are reported
34
on the identified cost basis. Distributions to shareholders are recorded on the
ex-dividend date. Income distributions are declared and paid by each class
annually. Capital gain distributions, if any, are generally declared and paid by
the fund annually.
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 reflected as
realized gain on securities in the accompanying financial statements and totaled
$541,000 for the year ended December 31, 2012. Additionally, the fund earns
credits on temporarily uninvested cash balances held at the custodian, which
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.
In-Kind Redemptions In accordance with guidelines described in the fund’s
prospectus, the fund may distribute portfolio securities rather than cash as
payment for a redemption of fund shares (in-kind redemption). For financial
reporting purposes, the fund recognizes a gain on in-kind redemptions to the
extent the value of the distributed securities on the date of redemption exceeds
the cost of those securities. Gains and losses realized on in-kind redemptions
35
are not recognized for tax purposes and are reclassified from undistributed
realized gain (loss) to paid-in capital. During the year ended December 31,
2012, the fund realized $385,378,000 of net gain on $867,929,000 of
in-kind redemptions.
New Accounting Pronouncements In December 2011, the FASB issued
amended guidance to enhance disclosure for offsetting assets and liabilities.
The guidance is effective for fiscal years and interim periods beginning on
or after January 1, 2013. Adoption will have no effect on the fund’s net
assets or results of operations.
Note 2 - VALUATION
The fund’s financial instruments are reported at fair value as defined by GAAP.
The fund determines the values of its assets and liabilities and computes each
class’s 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.
Valuation Methods Equity securities listed or regularly traded on a securities
exchange or in the over-the-counter (OTC) 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.
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 private placements,
and those financial instruments 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 (the Board). Subject to oversight
by the Board, the Valuation Committee develops pricing-related policies
36
and procedures and approves all fair-value determinations. The Valuation
Committee regularly makes good faith judgments, using a wide variety of
sources and information, to establish and adjust valuations of certain securities as events occur and circumstances warrant. For instance, in determining
the fair value of private-equity instruments, the Valuation Committee considers
a variety of factors, including the company’s business prospects, its financial
performance, strategic events impacting the company, relevant valuations of
similar companies, new rounds of financing, and any negotiated transactions of
significant size between other investors in the company. Because any fair-value
determination involves a significant amount of judgment, there is a degree of
subjectivity inherent in such pricing decisions.
For valuation purposes, the last quoted prices of non-U.S. equity securities
may be adjusted under the circumstances described below. 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, the fund will adjust the previous closing prices to
reflect what it believes to be the fair value of the securities as of the close of the
NYSE. In deciding whether it is necessary to adjust closing prices to reflect fair
value, 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. A fund may also fair value securities in other situations,
such as when a particular foreign market is closed but the fund is open. The
fund uses outside pricing services to provide it with closing prices and information to evaluate and/or adjust those prices. The fund cannot predict how often
it will use closing prices and how often it will determine it necessary to adjust
those prices to reflect fair value. As a means of evaluating its security valuation
process, the fund routinely compares closing prices, the next day’s opening
prices in the same markets, and adjusted prices. Additionally, trading in the
underlying securities of the fund may take place in various foreign markets
on certain days when the fund is not open for business and does not calculate
a net asset value. As a result, net asset values may be significantly affected on
days when shareholders cannot make transactions.
37
Valuation Inputs Various inputs are used to determine the value of the fund’s
financial instruments. These inputs are summarized in the three broad levels
listed below:
Level 1 – quoted prices in active markets for identical financial instruments
Level 2 – observable inputs other than Level 1 quoted prices (including, but
not limited to, quoted prices for similar financial instruments, interest
rates, prepayment speeds, and credit risk)
Level 3 – unobservable inputs
Observable inputs are those based on market data obtained from sources
independent of the fund, and unobservable inputs reflect the fund’s own
assumptions based on the best information available. The input levels are
not necessarily an indication of the risk or liquidity associated with financial
instruments at that level. For example, non-U.S. equity securities actively
traded in foreign markets generally are reflected in Level 2 despite the
availability of closing prices because the fund evaluates and determines whether
those closing prices reflect fair value at the close of the NYSE or require
adjustment, as described above. The following table summarizes the fund’s
financial instruments, based on the inputs used to determine their values
on December 31, 2012:
($000s)
Investments in Securities,
except:
Common Stocks
Convertible Preferred Stocks
Total
$
Level 1
Level 2
Level 3
Quoted
Prices
Significant
Observable
Inputs
Significant
Unobservable
Inputs
568,450 $
—$
568,450
17,075,729
342,445
3,393
17,421,567
—
—
50,410
50,410
$ 17,644,179 $
38
—$
Total Value
342,445 $
53,803 $
18,040,427
Following is a reconciliation of the fund’s Level 3 holdings for the year
ended December 31, 2012. Transfers into and out of Level 3 are reflected
at the value of the financial instrument at the beginning of the period. Gain
(loss) reflects both realized and change in unrealized gain (loss) on Level 3
holdings during the period, if any, and is included on the accompanying
Statement of Operations. The change in unrealized gain (loss) on Level 3
instruments held at December 31, 2012, totaled $(94,451,000) for the year
ended December 31, 2012.
Beginning
Balance
1/1/12
($000s)
Gain (Loss)
During
Period
Ending
Balance
12/31/12
Transfers
Out of
Level 3
Total
Purchases
Investments in Securities
Common Stocks
Convertible
Preferred Stocks
Total Level 3
$
—
$
(599)
123,584
(93,852)
$ 123,584
$ (94,451)
$
$
3,992
$
—
31,361
(10,683)
35,353
$ (10,683)
$
3,393
50,410
$
53,803
Note 3 - OTHER Investment Transactions
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks and/or to 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.
Restricted Securities The fund may invest in securities that are subject to
legal or contractual restrictions on resale. Prompt sale of such securities at
an acceptable price may be difficult and may involve substantial delays and
additional costs.
Securities Lending The fund lends its securities to approved brokers to earn
additional income. It receives as collateral cash and U.S. government securities
valued at 102% to 105% of the value of the securities on loan. Collateral is
maintained over the life of the loan in an amount not less than the value of
loaned securities as determined at the close of fund business each day; any
additional collateral required due to changes in security values is delivered
to the fund the next business day. Cash collateral is invested by the fund’s
39
lending agent(s) in accordance with investment guidelines approved by
management. Although risk is mitigated by the collateral, the fund could
experience a delay in recovering its securities and a possible loss of income or
value if the borrower fails to return the securities or if collateral investments
decline in value. Securities lending revenue recognized by the fund consists of
earnings on invested collateral and borrowing fees, net of any rebates to the
borrower and compensation to the lending agent. In accordance with GAAP,
investments made with cash collateral are reflected in the accompanying
financial statements, but collateral received in the form of securities is not. At
December 31, 2012, there were no securities on loan.
Other Purchases and sales of portfolio securities other than short-term securities
aggregated $5,139,680,000 and $6,971,906,000, respectively, for the year
ended December 31, 2012.
Note 4 - 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. Distributions determined in accordance with federal income
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 but are
not adjusted for temporary differences.
The fund files U.S. federal, state, and local tax returns as required. The fund’s
tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after
the filing of the tax return but which can be extended to six years in certain
circumstances. Tax returns for open years have incorporated no uncertain tax
positions that require a provision for income taxes.
Reclassifications to paid-in capital relate primarily to redemptions in kind and
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
40
offset of the current net operating loss against realized gains. For the year ended
December 31, 2012, the following reclassifications were recorded to reflect tax
character (there was no impact on results of operations or net assets):
($000s)
Undistributed net investment income
$
202
Undistributed net realized gain
(624,072)
Paid-in capital
623,870
Distributions during the years ended December 31, 2012 and December 31,
2011, were characterized for tax purposes as follows:
($000s)
December 31
2012
2011
Ordinary income
$
191,297
$
232,263
Long-term capital gain
883,635
1,265,878
Total distributions
$ 1,074,932
$ 1,498,141
At December 31, 2012, the tax-basis cost of investments and components of net
assets were as follows:
($000s)
Cost of investments
$
13,803,823
Unrealized appreciation $
4,669,764
Unrealized depreciation Net unrealized appreciation (depreciation)
4,236,603
Undistributed long-term capital gain 71,718
Capital loss carryforwards
Paid-in capital
13,759,046
$
18,015,227
Net assets
(433,161)
(52,140)
The difference between book-basis and tax-basis net unrealized appreciation
(depreciation) is attributable to the deferral of losses from wash sales and
the realization of gains/losses on passive foreign investment companies for
tax purposes. The fund intends to retain realized gains to the extent of available
capital loss carryforwards. Net realized capital losses may be carried forward
indefinitely to offset future realized capital gains. All or a portion of the capital
41
loss carryforwards may be from losses realized between November 1 and the
fund’s fiscal year-end, which are deferred for tax purposes until the subsequent
year but recognized for financial reporting purposes in the year realized.
Note 5 - related Party Transactions
The fund is managed by T. Rowe Price Associates, Inc. (Price Associates), a
wholly owned subsidiary of T. Rowe Price Group, Inc. (Price Group). The
investment management agreement between the fund and Price Associates
provides for an annual investment management fee, which is computed daily
and paid monthly. The fee consists of an individual fund fee and a group fee.
The individual fund fee is equal to 0.35% of the fund’s average daily net assets
up to $15 billion and 0.30% of the fund’s average daily net assets in excess of
$15 billion. The group fee rate 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 0.28% for assets in excess of $300 billion. The fund’s group fee is
determined by applying the group fee rate to the fund’s average daily net assets.
At December 31, 2012, the effective annual group fee rate was 0.30%.
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 provides certain other administrative services to 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 sub
accounting and recordkeeping services for certain retirement accounts invested
in the Investor Class and R Class. For the year ended December 31, 2012,
expenses incurred pursuant to these service agreements were $141,000 for
Price Associates; $2,622,000 for T. Rowe Price Services, Inc.; and $6,892,000
for T. Rowe Price Retirement Plan Services, Inc. The total amount payable at
period-end pursuant to these service agreements is reflected as Due to Affiliates
in the accompanying financial statements.
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, 2012, the fund was charged $174,000 for shareholder servicing
42
costs related to the college savings plans, of which $141,000 was for services
provided by Price. The amount payable at period-end pursuant to this agreement is reflected as Due to Affiliates in the accompanying financial statements.
At December 31, 2012, approximately 1% 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
year ended December 31, 2012, the fund was allocated $125,000 of Spectrum
Funds’ expenses and $4,238,000 of Retirement Funds’ expenses. Of these
amounts, $2,457,000 related to services provided by Price. The amount payable
at period-end pursuant to this agreement is reflected as Due to Affiliates in
the accompanying financial statements. At December 31, 2012, approximately
1% of the outstanding shares of the Investor Class were held by the Spectrum
Funds and 14% 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
T. Rowe Price Reserve Investment Funds), open-end management investment
companies managed by Price Associates and considered affiliates of the fund.
The T. Rowe Price Reserve Investment 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 T. Rowe Price Reserve Investment Funds pay no
investment management fees.
43
R eport of I ndependent R egistered P ublic A ccounting F irm
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, 2012, and the results of its operations, the
changes in its net assets and the financial highlights for each of the periods
indicated therein, 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 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, 2012 by correspondence with the custodian
and brokers, and confirmation of the underlying funds by correspondence with
the transfer agent, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 15, 2013
44
T ax I nformation (U naudited ) for the T ax Y ear E nded 12/31/12
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:
• $212,343,000 from short-term capital gains,
• $1,108,646,000 from long-term capital gains, subject to the 15% rate gains category.
For taxable non-corporate shareholders, $147,283,000 of the fund’s income represents
qualified dividend income subject to the 15% rate category.
For corporate shareholders, $130,446,000 of the fund’s income qualifies for the dividendsreceived deduction.
I nformation on P roxy V oting P olicies, P rocedures, and R ecords
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 website, sec.gov. The description of our proxy voting policies
and procedures is also available on our website, troweprice.com. To access it, click on the
words “Our Company” at the top of our corporate homepage. Then, when the next page
appears, click on the words “Proxy Voting Policies” on the left side of the page.
Each fund’s most recent annual proxy voting record is available on our website and
through the SEC’s website. To access it through our website, follow the directions above,
then click on the words “Proxy Voting Records” on the right side of the Proxy Voting
Policies page.
H ow to O btain Q uarterly P ortfolio H oldings
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 website (sec.gov); hard copies may be reviewed and copied at the SEC’s Public Reference Room, 100 F St. N.E., Washington, DC 20549. For more information on the Public Reference Room, call 1-800-SEC-0330.
45
A bout the F und’s D irectors and O fficers
Your fund is overseen by a Board of Directors (Board) that meets regularly to review a wide variety
of matters affecting the fund, including performance, investment programs, compliance matters,
advisory fees and expenses, service providers, and other business affairs. The Board elects the fund’s
officers, who are listed in the final table. At least 75% of the Board’s members are independent of
T. Rowe Price Associates, Inc. (T. Rowe Price), and its affiliates; “inside” or “interested” directors are
employees or officers of T. Rowe Price. The business address of each director and officer is 100 East
Pratt Street, Baltimore, Maryland 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 1-800-638-5660.
Independent Directors
Name
(Year of Birth)
Year Elected*
[Number of T. Rowe Price
Portfolios Overseen]
Principal Occupation(s) and Directorships of Public Companies and
Other Investment Companies During the Past Five Years
William R. Brody, M.D., Ph.D.
(1944)
2009
[142]
President and Trustee, Salk Institute for Biological Studies (2009
to present); Director, Novartis, Inc. (2009 to present); Director, IBM
(2007 to present); President and Trustee, Johns Hopkins University
(1996 to 2009); Chairman of Executive Committee and Trustee,
Johns Hopkins Health System (1996 to 2009)
Anthony W. Deering
(1945)
2001
[142]
Chairman, Exeter Capital, LLC, a private investment firm (2004
to present); Director, Under Armour (2008 to present); Director,
Vornado Real Estate Investment Trust (2004 to present); Director
and Member of the Advisory Board, Deutsche Bank North America
(2004 to present); Director, Mercantile Bankshares (2002 to 2007)
Donald W. Dick, Jr.
(1943)
1992
[142]
Principal, EuroCapital Partners, LLC, an acquisition and management
advisory firm (1995 to present)
Robert J. Gerrard, Jr.
(1952)
2012
[90]
Chairman of Compensation Committee and Director, Syniverse
Holdings, Inc. (2008 to 2011); Executive Vice President and General
Counsel, Scripps Networks, LLC (1997 to 2009); Advisory Board
Member, Pipeline Crisis/Winning Strategies (1997 to present)
Karen N. Horn
(1943)
2003
[142]
Senior Managing Director, Brock Capital Group, an advisory and
investment banking firm (2004 to present); Director, Eli Lilly and
Company (1987 to present); Director, Simon Property Group (2004
to present); Director, Norfolk Southern (2008 to present); Director,
Fannie Mae (2006 to 2008)
*Each independent director serves until retirement, resignation, or election of a successor.
46
Independent Directors (continued)
Name
(Year of Birth)
Year Elected*
Theo C. Rodgers
(1941)
2005
[142]
President, A&R Development Corporation (1977 to present)
Cecilia E. Rouse, Ph.D.
(1963)
2012
[90]
Professor and Researcher, Princeton University (1992 to present);
Director, MDRC (2011 to present); Member, National Academy of
Education (2010 to present); Research Associate, National Bureau
of Economic Research’s Labor Studies Program (1998 to 2009
and 2011 to present); Member, President’s Council of Economic
Advisors (2009 to 2011); Member, The MacArthur Foundation
Network on the Transition to Adulthood and Public Policy (2000 to
2008); Member, National Advisory Committee for the Robert Wood
Johnson Foundation’s Scholars in Health Policy Research Program
(2008); Director and Member, National Economic Association
(2006 to 2008); Member, Association of Public Policy Analysis and
Management Policy Council (2006 to 2008); Member, Hamilton
Project’s Advisory Board at The Brookings Institute (2006 to 2008);
Chair of Committee on the Status of Minority Groups in the Economic
Profession, American Economic Association (2006 to 2008)
John G. Schreiber
(1946)
2001
[142]
Owner/President, Centaur Capital Partners, Inc., a real estate
investment company (1991 to present); Cofounder and Partner,
Blackstone Real Estate Advisors, L.P. (1992 to present); Director,
General Growth Properties, Inc. (2010 to present)
Mark R. Tercek
(1957)
2009
[142]
President and Chief Executive Officer, The Nature Conservancy (2008
to present); Managing Director, The Goldman Sachs Group, Inc.
(1984 to 2008)
*Each independent director serves until retirement, resignation, or election of a successor.
47
Inside Directors
Name
(Year of Birth)
Year Elected*
Edward C. Bernard
(1956)
2006
[142]
Director and Vice President, T. Rowe Price; Vice Chairman of the
Board, Director, and Vice President, T. Rowe Price Group, Inc.;
Chairman of the Board, Director, and President, T. Rowe Price
Investment Services, Inc.; Chairman of the Board and Director,
T. Rowe Price Retirement Plan Services, Inc., T. Rowe Price Savings
Bank, and T. Rowe Price Services, Inc.; Chairman of the Board, Chief
Executive Officer, and Director, T. Rowe Price International; Chief
Executive Officer, Chairman of the Board, Director, and President,
T. Rowe Price Trust Company; Chairman of the Board, all funds
Brian C. Rogers, CFA, CIC
(1955)
2006
[75]
Chief Investment Officer, Director, and Vice President, T. Rowe Price;
Chairman of the Board, Chief Investment Officer, Director, and Vice
President, T. Rowe Price Group, Inc.; Vice President, T. Rowe Price
Trust Company
*Each inside director serves until retirement, resignation, or election of a successor.
Officers
Name (Year of Birth)
Position Held With Mid-Cap Growth Fund
Principal Occupation(s)
Kennard W. Allen (1977)
Vice President
Vice President, T. Rowe Price and T. Rowe Price
Group, Inc.
P. Robert Bartolo, CFA, CPA (1972)
Vice President
Vice President, T. Rowe Price, T. Rowe Price
Group, Inc., and T. Rowe Price Trust Company
Brian W.H. Berghuis, CFA (1958)
President
Shawn T. Driscoll (1975)
Vice President
Vice President, T. Rowe Price Group, Inc.
Donald J. Easley, CFA (1971)
Vice President
Group, Inc.
Henry M. Ellenbogen (1973)
Vice President
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International
for at least 5 years.
48
Officers (continued)
Roger L. Fiery III, CPA (1959)
Vice President
Vice President, Price Hong Kong, Price
Singapore, T. Rowe Price, T. Rowe Price Group,
Inc., T. Rowe Price International, and T. Rowe
Price Trust Company
John R. Gilner (1961)
Chief Compliance Officer
Chief Compliance Officer and Vice President,
T. Rowe Price; Vice President, T. Rowe Price
Group, Inc., and T. Rowe Price Investment
Services, Inc.
Gregory S. Golczewski (1966)
Vice President
Trust Company
Gregory K. Hinkle, CPA (1958)
Treasurer
Kris H. Jenner, M.D., D.Phil. (1962)
Vice President
Group, Inc., and T. Rowe Price International
Patricia B. Lippert (1953)
Secretary
Assistant Vice President, T. Rowe Price and
T. Rowe Price Investment Services, Inc.
Robert J. Marcotte (1962)
Vice President
Group, Inc.
Daniel Martino, CFA (1974)
Vice President
Group, Inc.
Joseph M. Milano, CFA (1972)
Vice President
Group, Inc.
David Oestreicher (1967)
Vice President
Director, Vice President, and Secretary, T. Rowe
Price Investment Services, Inc., T. Rowe
Price Retirement Plan Services, Inc., T. Rowe
Price Services, Inc., and T. Rowe Price Trust
Company; Vice President and Secretary,
T. Rowe Price, T. Rowe Price Group, Inc., and
T. Rowe Price International; Vice President,
Price Hong Kong and Price Singapore
49
Officers (continued)
Deborah D. Seidel (1962)
Vice President
Group, Inc., T. Rowe Price Investment Services,
Inc., and T. Rowe Price Services, Inc.
Clark R. Shields (1976)
Vice President
Group, Inc.
Taymour R. Tamaddon, CFA (1976)
Vice President
Group, Inc.
John F. Wakeman (1962)
Executive Vice President
Group, Inc.
Julie L. Waples (1970)
Vice President
Vice President, T. Rowe Price
50
T. Rowe Price Investment Services and Information
This page contains supplementary information that is not part of the shareholder report.
Investment Services and Information
KNOWLEDGEABLE CUSTOMER SERVICE
On the Web at troweprice.com.
By Phone at 1-800-225-5132. Available Monday through Friday from 8 a.m. until
10 p.m. ET and Saturday from 8:30 a.m. until 5 p.m. ET.
In Person at a T. Rowe Price Investor Center. Please visit the website at
troweprice.com/investorcenter or call 1-800-225-5132 to locate a center near you.
ACCOUNT SERVICES
Account Access. Through the T. Rowe Price website at troweprice.com and via
phone through Tele*Access®.
Automatic Investing. From your bank account or paycheck.
Automatic Withdrawal. Scheduled, periodic redemptions.
IRA Rebalancing. Automatically rebalance to ensure that your accounts reflect
your desired asset allocations.
BROKERAGE SERVICES ‡
Trade stocks, mutual funds, ETFs, bonds, options, CDs, precious metals,
and more at competitive commissions.
INVESTMENT INFORMATION
Consolidated Statement. Overview of all of your T. Rowe Price mutual fund and
Brokerage accounts.
Shareholder Reports. Manager reviews of their strategies and results.
T. Rowe Price Report. Quarterly investment newsletter.
T. Rowe Price Investor. Quarterly publication of insightful financial articles.
Investment Guides. International Investing Guide, Guide to Bond Funds, Investors
Portfolio Review, Retirement Savings Guide, and Retirement Readiness Guide.
FINANCIAL INTERMEDIARIES AND ADVISORS
By Phone at 1-877-804-2315. Contact us Monday through Friday from 8:30 a.m.
until 6 p.m. ET.
By Mail: T. Rowe Price, Financial Institution Services, P.O. Box 89000, Baltimore,
MD 21289-4232.
CUSTOMERS WHO TRADE THROUGH A FINANCIAL INTERMEDIARY
Please contact your intermediary or financial professional for assistance.
‡
Options trading involves additional risk and is not suitable for all investors. Brokerage services offered by T. Rowe Price Investment Services, Inc., member FINRA/SIPC.
51
T. Rowe Price Web Services
troweprice.com
LOG IN AND MANAGE YOUR INVESTMENTS ONLINE troweprice.com/access
Manage your account by checking balances with up-to-date statements, tracking
and analyzing your portfolio, and/or granting View Access to others as you see fit.
Perform transactions at your convenience. Buy, sell, or exchange shares securely,
quickly, and easily. You can also set up automatic investing and add a bank account
to move money easily.
Update your preferences by confirming your contact information and verifying
your beneficiaries so your assets can be distributed as you wish.
ONLINE SERVICING
troweprice.com/paperless
Enroll to receive your transaction confirmations, investor statements, prospectuses, and shareholder reports online instead of by U.S. mail.1 You will receive
an e-mail with a link to our website informing you that your document is available
to view online, print, or download.
Join our E-mail Program to receive market and fund information by e-mail.
Receive timely market reports, performance of T. Rowe Price mutual funds, investment and market insights from T. Rowe Price managers, and more.
INVESTMENT GUIDANCE AND TOOLS
troweprice.com/planningtools
Morningstar® Portfolio Manager enables you to track, rebalance, and analyze
your portfolio.
Morningstar Portfolio X-Ray® is a comprehensive tool that provides an in-depth
examination of your exposure to different sectors, stock types, sub-asset classes,
and global diversification.
Portfolio Growth Tracker allows you to track the historical growth of your
mutual fund investments over time. The analysis consists of three components:
Activity Summary, Asset Allocation, and Net Investment versus Market Value.
Retirement Income Calculator.
FINANCIAL INTERMEDIARIES AND ADVISORS
troweprice.com/financialintermediaries
This secure site is designed for professional financial intermediaries and advisors.
Financial professionals may access daily prices and historical performance of
mutual funds; view market research, manager commentary, and sales ideas; and
access literature and forms. For U.S. technical assistance, call 1-888-358-8490
or e-mail us at [email protected]. For non-U.S. technical assistance,
call +1 (410) 345 4400 or contact us via e-mail.
By signing up for paperless services, you may qualify for the account service fee waiver. Visit us
at troweprice.com/feesandminimums to find out more.
1
52
T. Rowe Price Planning Tools and Services
T. Rowe Price Retirement Services
T. Rowe Price offers unique retirement services that can help you meet a broad
variety of planning challenges. Our retirement tools are suitable for individuals,
the self-employed, small businesses, corporations, and nonprofit organizations.
For more information, call 1-800-IRA-5000 or visit our website at
troweprice.com/retirement.
INVESTMENT ACCOUNTS
Rollover IRAs. Whether you’ve changed jobs, experienced a job loss, or retired,
it’s important to make a smart decision regarding your old 401(k). Call toll-free
1-800-IRA-5000. Our rollover s pecialists can open your account over the phone
and handle most of the paperwork for you. They’ll even contact your former
employer to help move your money.
Roth IRAs. A Roth IRA offers tax-free withdrawals and a flexible distribution schedule.
Open your account at troweprice.com/ira or call 1-800-IRA-5000.
Traditional IRAs. Traditional IRA contributions may be tax-deductible, with
no taxes due until withdrawal. Open your account at troweprice.com/ira or call
1-800-IRA-5000.
Small Business Retirement Plans. If you’re self-employed or run a small business
or professional practice, T. Rowe Price can help you establish a cost-effective retirement plan that’s easy to set up and maintain.
403(b) Custodial Accounts. For those employed by a nonprofit or tax-exempt
organization such as a school, church, or hospital, T. Rowe Price offers an effective,
low-cost way to save for retirement.
INVESTMENT GUIDANCE
T. Rowe Price Advisory Planning Services offers a wide range of services that
provide expert advice based on your individual needs and financial goals, including
consultations with an advisory counselor. Please contact one of our specialists at
1-888-744-0270 to determine the most appropriate service to fit your needs.*
*Services offered by T. Rowe Price Advisory Services, Inc., a federally registered investment
adviser. There may be costs associated with these services.
53
T. Rowe Price Mutual Funds
STOCK FUNDS
BOND FUNDS
Money MArket FUNDS (cont.)
Domestic
Blue Chip Growth*
Capital Appreciation*
Capital Opportunity*
Diversified Mid-Cap Growth
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 Equity
Total Equity Market Index
U.S. Large-Cap Core*
Value*
Domestic Taxable
Corporate Income
Floating Rate*
GNMA
High Yield*§
Inflation Protected Bond
New Income*
Short-Term Bond*
Spectrum Income
Strategic Income*
Summit GNMA
Ultra Short-Term Bond
U.S. Bond Enhanced Index
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Tax-Free
California Tax-Free Money
Maryland Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
ASSET ALLOCATION FUNDS
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Real Assets
Retirement Funds*ˆ
Domestic Tax-Free
California Tax-Free Bond
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 Short-Intermediate*
Virginia Tax-Free Bond
MONEY MARKET FUNDS
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
INTERNATIONAL/GLOBAL
FUNDS
Stock
Africa & Middle East
Emerging Europe
Emerging Markets Stock
European Stock
Global Infrastructure*
Global Large-Cap Stock*
Global Real Estate*
Global Stock*
Global Technology
International Discovery
International Equity Index
International Growth & Income*
International Stock*
Japan
Latin America
New Asia
Overseas Stock
Spectrum International
Bond
Emerging Markets Bond
Emerging Markets Corporate Bond*
Emerging Markets Local
Currency Bond*
International Bond*
For more information about T. Rowe Price funds or services, please contact us directly at
1-800-225-5132. Request a prospectus or summary prospectus; each includes investment objectives,
risks, fees, expenses, and other information that you should read and consider carefully before investing.
Investments in the money market 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.
*T. Rowe Price Advisor and R Classes may be available for these funds. T. Rowe Price Advisor and R Classes are offered only through financial intermediaries. For more information about T. Rowe Price
Advisor and R Classes, contact your financial professional or call T. Rowe Price at 1-877-804-2315.
‡Closed to new investors except for a direct rollover from a retirement plan into a T. Rowe Price IRA
invested in this fund.
ˆThe Retirement Funds are inclusive of the Retirement 2005, 2010, 2015, 2020, 2025, 2030, 2035,
2040, 2045, 2050, 2055, and Income Funds.
§Subject to certain exceptions, the fund will be closed to new investors effective April 30, 2012.
T. Rowe Price Investment Services, Inc. 100 East Pratt Street
Baltimore, MD 21202
129322
F64-050 2/13

RPMGX PAMCX RRMGX Mid-Cap Growth Fund Mid

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