N-CSRS 1 mcv.txt T. ROWE PRICE MID-CAP VALUE FUND Item 1. Report to Shareholders T. Rowe Price Mid-Cap Value Fund -------------------------------------------------------------------------------- Certified Financials T. Rowe Price Mid-Cap Value Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) Financial Highlights For a share outstanding throughout each period -------------------------------------------------------------------------------- Mid-Cap Value shares 6 Months Year Ended Ended 6/30/03 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 NET ASSET VALUE Beginning of period $ 15.00 $ 16.40 $ 15.64 $ 13.37 $ 13.66 $ 14.47 Investment activities Net investment income (loss) 0.08 0.13 0.13 0.18 0.23 0.19 Net realized and unrealized gain (loss) 1.89 (1.34) 2.07 2.82 0.22 (0.05) Total from investment activities 1.97 (1.21) 2.20 3.00 0.45 0.14 Distributions Net investment income -- (0.12) (0.13) (0.17) (0.23) (0.19) Net realized gain -- (0.07) (1.31) (0.56) (0.51) (0.76) Total distributions -- (0.19) (1.44) (0.73) (0.74) (0.95) NET ASSET VALUE End of period $ 16.97 $ 15.00 $ 16.40 $ 15.64 $ 13.37 $ 13.66 -------------------------------------------------------------------------------- Ratios/Supplemental Data Total return^ 13.13% (7.38)% 14.36% 22.75% 3.52% 1.39% Ratio of total expenses to average net assets 0.95%! 0.96% 0.98% 0.99% 1.04% 1.08% Ratio of net investment income (loss) to average net assets 1.07%! 0.98% 0.95% 1.33% 1.60% 1.24% Portfolio turnover rate 46.7%! 51.1% 57.5% 31.9% 26.8% 32.0% Net assets, end of period (in millions) $ 1,189 $ 991 $ 503 $ 282 $ 212 $ 221 ^ Total return reflects the rate that an investor would have earned on an investment in the fund during each period, assuming reinvestment of all distributions. ! Annualized The accompanying notes are an integral part of these financial statements. T. Rowe Price Mid-Cap Value Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) Financial Highlights For a share outstanding throughout each period -------------------------------------------------------------------------------- Mid-Cap Value-Advisor Class shares 6 Months 9/30/02 Ended Through 6/30/03 12/31/02 NET ASSET VALUE Beginning of period $ 14.99 $ 13.97 Investment activities Net investment income (loss) 0.10* 0.04* Net realized and unrealized gain (loss) 1.86 1.17** Total from investment activities 1.96 1.21 Distributions Net investment income -- (0.12) Net realized gain -- (0.07) Total distributions -- (0.19) NET ASSET VALUE End of period $ 16.95 $ 14.99 -------------------------------------------------------------------------------- Ratios/Supplemental Data Total return^ 13.08%* 8.66%* Ratio of total expenses to average net assets 1.10%*! 1.10%*! Ratio of net investment income (loss) to average net assets 0.91%*! 1.29%*! Portfolio turnover rate 46.7%! 51.1% Net assets, end of period (in thousands) $ 8,445 $ 1,528 * Excludes expenses in excess of a 1.10% contractual expense limitation in effect through 4/30/04. ** The amount presented is calculated pursuant to a methodology prescribed by the Securities and Exchange Commission for a share outstanding throughout the period. This amount is inconsistent with the fund's aggregate gains and losses because of the timing of sales and redemptions of fund shares in relation to fluctuating market values for the investment portfolio. ^ Total return reflects the rate that an investor would have earned on an investment in the fund during each period, assuming reinvestment of all distributions. ! Annualized The accompanying notes are an integral part of these financial statements. T. Rowe Price Mid-Cap Value Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) Financial Highlights For a share outstanding throughout each period -------------------------------------------------------------------------------- Mid-Cap Value-R Class shares 6 Months 9/30/02 Ended Through 6/30/03 12/30/02 NET ASSET VALUE Beginning of period $ 15.00 $ 13.97 Investment activities Net investment income (loss) 0.09* 0.03* Net realized and unrealized gain (loss) 1.83 1.18** Total from investment activities 1.92 1.21 Distributions Net investment income -- (0.11) Net realized gain -- (0.07) Total distributions -- (0.18) NET ASSET VALUE End of period $ 16.92 $ 15.00 --------------- --------------- Ratios/Supplemental Data Total return^ 12.80%* 8.66%* Ratio of total expenses to average net assets 1.40%*! 1.40%*! Ratio of net investment income (loss) to average net assets 0.56%*! 0.84%*! Portfolio turnover rate 46.7%! 51.1% Net assets, end of period (in thousands) $ 990 $ 109 * Excludes expenses in excess of a 1.40% contractual expense limitation in effect through 4/30/04. ** The amount presented is calculated pursuant to a methodology prescribed by the Securities and Exchange Commission for a share outstanding throughout the period. This amount is inconsistent with the fund's aggregate gains and losses because of the timing of sales and redemptions of fund shares in relation to fluctuating market values for the investment portfolio. ^ Total return reflects the rate that an investor would have earned on an investment in the fund during each period, assuming reinvestment of all distributions. ! Annualized The accompanying notes are an integral part of these financial statements. T. Rowe Price Mid-Cap Value Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) June 30, 2003 Statement of Net Assets Shares/Par Value -------------------------------------------------------------------------------- In thousands Common Stocks 95.3% CONSUMER DISCRETIONARY 13.5% Household Durables 1.1% Stanley Works 465,000 $ 12,834 12,834 Leisure Equipment & Products 2.7% Brunswick 630,000 15,762 Hasbro 946,600 16,556 32,318 Media 5.7% Dow Jones 306,000 13,167 Meredith 271,000 11,924 New York Times, Class A 75,000 3,413 Pearson (GBP) 699,000 6,539 Reader's Digest, Class A 56,531 762 Reuters (GBP) 5,025,000 14,598 Scholastic * 181,000 5,390 Washington Post, Class B 18,000 13,192 68,985 Multiline Retail 2.8% Kmart * 440,000 11,902 Neiman Marcus, Class A * 179,700 6,577 Nordstrom 769,000 15,011 33,490 Specialty Retail 0.7% GAP 421,000 7,898 7,898 Textiles, Apparel, & Luxury Goods 0.5% Unifi * 965,000 5,983 5,983 Total Consumer Discretionary 161,508 CONSUMER STAPLES 3.4% Food Products 3.4% Archer-Daniels-Midland 1,289,000 16,589 Campbell Soup 510,000 12,495 Heinz 356,000 11,741 Total Consumer Staples 40,825 ENERGY 6.7% Energy Equipment & Services 3.1% Baker Hughes 363,000 $ 12,186 Diamond Offshore Drilling 1,180,000 24,768 36,954 Oil & Gas 3.6% Amerada Hess 352,000 17,311 BG Group (GBP) 1,340,000 5,947 Marathon Oil 773,000 20,369 43,627 Total Energy 80,581 FINANCIALS 16.8% Capital Markets 2.7% Janus Capital Group 970,000 15,908 Northern Trust 399,000 16,674 32,582 Commercial Banks 5.4% Citizens Banking 250,000 6,692 Commerce Bancshares 335,975 13,086 Cullen/Frost Bankers 175,000 5,618 Huntington Bancshares 580,000 11,322 Mercantile Bankshares 175,000 6,891 National Commerce Financial 320,000 7,101 Synovus Financial 600,000 12,900 Wachovia 35,000 1,399 65,009 Diversified Financial Services 0.5% Groupe Bruxelles Lambert (EUR) 120,000 5,438 5,438 Insurance 7.9% 21st Century Insurance Group 79,000 1,130 Cincinnati Financial 248,000 9,198 Hartford Financial Services Group 251,800 12,681 Loews 280,000 13,241 Mercury General 49,000 2,237 Ohio Casualty * 853,000 11,242 Protective Life 425,000 $ 11,369 SAFECO 403,700 14,242 St. Paul Companies 414,400 15,130 UnumProvident 337,700 4,529 94,999 Thrifts & Mortgage Finance 0.3% PMI Group 128,600 3,452 3,452 Total Financials 201,480 HEALTH CARE 4.7% Biotechnology 1.0% Millennium Pharmaceuticals * 220,000 3,460 Protein Design Labs * 610,000 8,528 11,988 Health Care Equipment & Supplies 1.3% Apogent Technologies * 299,800 5,996 Guidant 210,000 9,322 15,318 Health Care Providers & Services 1.8% Aetna 108,000 6,502 Davita * 350,000 9,373 Omnicare 185,000 6,251 22,126 Pharmaceuticals 0.6% Andrx * 347,000 6,905 6,905 Total Health Care 56,337 INDUSTRIALS & BUSINESS SERVICES 11.1% Aerospace & Defense 2.2% Raytheon 434,000 14,252 Rockwell Collins 517,200 12,739 26,991 Air Freight & Logistics 2.0% CNF 524,000 13,299 Ryder System 395,000 10,120 23,419 Commercial Services & Supplies 4.2% Herman Miller 738,000 $ 14,915 Manpower 300,000 11,127 ServiceMaster 1,126,500 12,053 Viad 540,000 12,091 50,186 Electrical Equipment 0.4% Hubbell, Class A 25,000 804 Hubbell, Class B 136,000 4,502 5,306 Machinery 1.9% Dover 358,000 10,726 Harsco 89,000 3,208 Joy Global * 595,600 8,797 22,731 Marine 0.4% Overseas Shipholding Group 212,400 4,675 4,675 Total Industrials & Business Services 133,308 INFORMATION TECHNOLOGY 11.2% Communications Equipment 1.5% Harris 275,000 8,264 Tellabs * 1,460,000 9,592 17,856 Electronic Equipment & Instruments 5.0% Agilent Technologies * 890,000 17,400 AVX 1,181,200 12,981 Littelfuse * 163,000 3,645 Molex, Class A 1,081,200 25,061 Technitrol * 89,900 1,353 60,440 IT Services 1.7% BearingPoint * 897,400 8,660 Ceridian * 693,000 11,760 20,420 Software 3.0% BMC Software * 1,022,000 $ 16,689 Cadence Design Systems * 890,000 10,734 PeopleSoft * 470,000 8,267 35,690 Total Information Technology 134,406 MATERIALS 10.5% Chemicals 2.5% Agrium 488,000 5,348 Great Lakes Chemical 579,600 11,824 Potash Corp./Saskatchewan 204,000 13,056 30,228 Metals & Mining 5.5% Newmont Mining 789,500 25,627 Nucor 264,500 12,921 Phelps Dodge * 382,200 14,654 Teck (CAD) 1,564,500 12,751 65,953 Paper & Forest Products 2.5% Bowater 111,500 4,176 MeadWestvaco 302,200 7,464 Potlatch 682,000 17,562 29,202 Total Materials 125,383 TELECOMMUNICATION SERVICES 3.9% Diversified Telecommunication Services 2.1% AT&T 465,000 8,951 Cable & Wireless (GBP) 7,435,000 13,887 Cable & Wireless ADR 392,400 2,147 24,985 Wireless Telecommunication Services 1.8% Crown Castle International * 400,000 3,108 Telephone and Data Systems 379,000 18,836 21,944 Total Telecommunication Services 46,929 UTILITIES 9.8% Electric Utilities 8.5% CMS Energy 327,000 $ 2,649 El Paso Electric * 990,000 12,207 FirstEnergy 607,300 23,351 PG&E * 150,000 3,172 Pinnacle West Capital 364,500 13,651 Puget Energy 100,000 2,387 Teco Energy 550,000 6,594 TXU 791,500 17,769 Unisource Energy 604,000 11,355 XCEL Energy 572,300 8,607 101,742 Gas Utilities 1.1% NiSource 667,000 12,673 12,673 Multi-Utilities & Unregulated Power 0.2% Duke Energy 130,000 2,594 2,594 Total Utilities 117,009 Total Miscellaneous Common Stocks 3.7% 44,839 Total Common Stocks (Cost $1,084,825) 1,142,605 Convertible Bonds 0.8% U.S. Cellular, LYONs, 6/15/15 14,850,000 7,080 XCEL Energy, 144A, 7.50%, 11/21/07 1,365,000 2,000 Total Convertible Bonds (Cost $7,124) 9,080 Short-Term Investments 4.0% Money Market Funds 4.0% T. Rowe Price Reserve Investment Fund, 1.16% # 47,795,419 47,795 Total Short-Term Investments (Cost $47,795) 47,795 Value -------------------------------------------------------------------------------- In thousands Total Investments in Securities 100.1% of Net Assets (Cost $1,139,744) $1,199,480 Other Assets Less Liabilities (774) NET ASSETS $ 1,198,706 -------------------- Net Assets Consist of: Undistributed net investment income (loss) $ 5,504 Undistributed net realized gain (loss) (6,750) Net unrealized gain (loss) 59,720 Paid-in-capital applicable to 70,651,938 shares of $0.0001 par value capital stock outstanding; 1,000,000,000 shares authorized 1,140,232 NET ASSETS $ 1,198,706 -------------------- NET ASSET VALUE PER SHARE Mid-Cap Value shares ($1,189,271,407/70,095,216 shares outstanding) $ 16.97 -------------------- Mid-Cap Value-Advisor Class shares ($8,444,869/498,202 shares outstanding) $ 16.95 -------------------- Mid-Cap Value-R Class shares ($990,212/58,520 shares outstanding) $ 16.92 -------------------- # Seven-day yield * Non-income producing 144A Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration only to qualified institutional buyers-total of such securities at period-end amounts to $2,000,000 and represents 0.2% of net assets ADR American Depository Receipts CAD Canadian dollar EUR Euro GBP British pound LYONs Liquid Yield Option Notes The accompanying notes are an integral part of these financial statements. T. Rowe Price Mid-Cap Value Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) Statement of Operations -------------------------------------------------------------------------------- In thousands 6 Months Ended 6/30/03 Investment Income (Loss) Income Dividend $ 9,494 Interest 505 Income distributions from mutual funds 325 Total income 10,324 Expenses Investment management 3,453 Shareholder servicing Mid-Cap Value shares 1,180 Mid-Cap Value-Advisor Class shares 2 Mid-Cap Value-R Class shares 1 Prospectus and shareholder reports Mid-Cap Value shares 85 Mid-Cap Value-Advisor Class shares 8 Custody and accounting 87 Registration 72 Legal and audit 12 Distribution Mid-Cap Value-Advisor Class shares 5 Mid-Cap Value-R Class shares 1 Directors 5 Reimbursed by manager to Mid-Cap Value-Advisor Class shares (7) Total expenses 4,904 Expenses paid indirectly (84) Net expenses 4,820 Net investment income (loss) 5,504 T. Rowe Price Mid-Cap Value Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) Statement of Operations -------------------------------------------------------------------------------- In thousands 6 Months Ended 6/30/03 Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities (4,796) Foreign currency transactions (49) Net realized gain (loss) (4,845) Change in net unrealized gain (loss) Securities 134,390 Other assets and liabilities denominated in foreign currencies (14) Change in net unrealized gain (loss) 134,376 Net realized and unrealized gain (loss) 129,531 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 135,035 -------------------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Mid-Cap Value Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) Statement of Changes in Net Assets -------------------------------------------------------------------------------- In thousands 6 Months Year Ended Ended 6/30/03 12/31/02 Increase (Decrease) in Net Assets Operations Net investment income (loss) $ 5,504 $ 8,525 Net realized gain (loss) (4,845) 413 Change in net unrealized gain (loss) 134,376 (124,567) Increase (decrease) in net assets from operations 135,035 (115,629) Distributions to shareholders Net investment income Mid-Cap Value shares -- (7,850) Mid-Cap Value-Advisor Class shares -- (10) Mid-Cap Value-R Class shares -- (1) Net realized gain Mid-Cap Value shares -- (4,569) Mid-Cap Value-Advisor Class shares -- (6) Mid-Cap Value-R Class shares -- (1) Decrease in net assets from distributions -- (12,437) Capital share transactions * Shares sold Mid-Cap Value shares 219,036 943,789 Mid-Cap Value-Advisor Class shares 6,398 1,518 Mid-Cap Value-R Class shares 886 100 Distributions reinvested Mid-Cap Value shares -- 11,503 Mid-Cap Value-Advisor Class shares -- 17 Mid-Cap Value-R Class shares -- 1 Shares redeemed Mid-Cap Value shares (155,046) (338,595) Mid-Cap Value-Advisor Class shares (325) (9) Mid-Cap Value-R Class shares (78) -- Increase (decrease) in net assets from capital share transactions 70,871 618,324 Net Assets Increase (decrease) during period 205,906 490,258 Beginning of period 992,800 502,542 End of period $ 1,198,706 $ 992,800 --------------- --------------- T. Rowe Price Mid-Cap Value Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) Statement of Changes in Net Assets -------------------------------------------------------------------------------- In thousands 6 Months Year Ended Ended 6/30/03 12/31/02 *Share information Shares sold Mid-Cap Value shares 14,417 56,581 Mid-Cap Value-Advisor Class shares 418 102 Mid-Cap Value-R Class shares 57 7 Distributions reinvested Mid-Cap Value shares -- 768 Mid-Cap Value-Advisor Class shares -- -- Mid-Cap Value-R Class shares -- -- Shares redeemed Mid-Cap Value shares (10,396) (21,922) Mid-Cap Value-Advisor Class shares (22) (1) Mid-Cap Value-R Class shares (5) -- Increase (decrease) in shares outstanding 4,469 35,535 The accompanying notes are an integral part of these financial statements. T. Rowe Price Mid-Cap Value Fund -------------------------------------------------------------------------------- Certified Financials (Unaudited) June 30, 2003 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 (the 1940 Act) as a diversified, open-end management investment company. The fund seeks to provide long-term capital appreciation by investing primarily in mid-size companies that appear to be undervalued. The fund has three classes of shares: Mid-Cap Value Fund (Mid-Cap Value Class), offered since June 28, 1996, Mid-Cap Value Fund-Advisor Class (Advisor Class), offered since September 30, 2002, and Mid-Cap Value Fund-R Class (R Class), offered since September 30, 2002. Advisor Class shares are offered only through brokers and other financial intermediaries, and R Class shares are only available to small retirement plans serviced by intermediaries. The Advisor Class and R Class each operate under separate Board-approved Rule 12b-1 plans, pursuant to which each class compensates financial intermediaries for distribution and certain administrative services. Each class has exclusive voting rights on matters related solely to that class, separate voting rights on matters that relate to all classes, and, in all other respects, the same rights and obligations as the other classes. The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates made by fund management. Valuation Investments are valued at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day that the NYSE is open for business. Equity securities listed or regularly traded on a securities exchange or in the over-the-counter market are valued at the last quoted sale price, or official closing price for certain markets, at the time the valuations are made. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Listed securities not traded on a particular day are valued at the mean of the latest bid and ask prices for domestic securities and the last quoted sale price for international securities. Debt securities are generally traded in the over-the-counter market. Securities with original maturities of one year or more are valued at prices furnished by dealers who make markets in such securities or by an independent pricing service, which considers yield or price of bonds of comparable quality, coupon, maturity, and type, as well as prices quoted by dealers who make markets in such securities. Securities with original maturities less than one year are valued at amortized cost in local currency, which approximates fair value when combined with accrued interest. Investments in mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. Other investments and those for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by or under the supervision of the officers of the fund, as authorized by the Board of Directors. Most foreign markets close before the NYSE. Developments that could affect the values of securities that occur between the close of a foreign market and the close of the NYSE normally will not be reflected in security valuations. However, if such developments are so significant that they will, in the judgment of the officers of the fund, clearly and materially affect the value of securities, the previous closing prices may be adjusted to reflect the fair value of the securities as of the close of the NYSE, 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, 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 ask 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 such gains and losses. Premiums and Discounts Premiums and discounts on debt securities are amortized for financial reporting purposes. Class Accounting The Advisor Class and R Class each pay distribution and administrative expenses in the form of Rule 12b-1 fees, in an amount not exceeding 0.25% and 0.50%, respectively, of the class's average net assets. Shareholder servicing, prospectus, and shareholder report expenses incurred by each class are charged directly to the class to which they relate. Expenses common to all classes, investment income, and realized and unrealized gains and losses are allocated to the classes based upon the relative daily net assets of each class. Income distributions are declared and paid by each class on an annual basis. Capital gain distributions, if any, are declared and paid by the fund, typically on an annual basis. Expenses Paid Indirectly Certain security trades are directed to brokers who have agreed to rebate a portion of the related commission to the fund to pay fund expenses. Additionally, credits earned on temporarily uninvested cash balances at the custodian are used to reduce the fund's custody charges. Total expenses in the accompanying statement of operations are presented before reduction for rebates and credits, which totaled $82,000 and $2,000, respectively, for the six months ended June 30, 2003. Other Income and expenses are recorded on the accrual basis. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Dividend income and distributions to shareholders are recorded by the fund on the ex-dividend date. Note 2 - Investment Transactions Purchases and sales of portfolio securities, other than short-term securities, aggregated $307,524,000 and $231,993,000, respectively, for the six months ended June 30, 2003. Note 3 - Federal Income Taxes No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company and distribute to shareholders all of its taxable income and gains. Federal income tax regulations differ from generally accepted accounting principles; therefore, distributions determined in accordance with tax regulations may differ in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Temporary differences are not adjusted. The amount and character of tax-basis distributions and composition of net assets are finalized at fiscal year-end; accordingly, tax-basis balances have not been determined as of June 30, 2003. For tax purposes, the fund has elected to treat net capital losses realized between November 1 and December 31 of each year as occurring on the first day of the following tax year; consequently, $1,905,000 of realized losses recognized for financial reporting purposes in the year ended December 31, 2002 were recognized for tax purposes on January 1, 2003. At June 30, 2003, the cost of investments for federal income tax purposes was $1,139,744,000. Net unrealized gain aggregated $59,720,000 at period-end, of which $128,438,000 related to appreciated investments and $68,718,000 related to depreciated investments. Note 4 - Related Party Transactions The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. The investment management agreement between the fund and the manager provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.35 % of the fund's average daily net assets, and the fund's pro-rata share of a group fee. The group fee is calculated based on the combined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee schedule, with rates ranging from 0.48% for the first $1 billion of assets to 0.295% for assets in excess of $120 billion. The fund's portion of the group fee is determined by the ratio of its net assets to those of the group. At June 30, 2003, the effective annual group fee rate was 0.32%, and investment management fee payable totaled $658,000. Through April 30, 2004, the manager is required to bear any expenses, excluding interest, taxes, brokerage commissions, and extraordinary expenses, for the Advisor Class and R Class that would cause the class's ratio of total expenses to average net assets (expense ratio) to exceed 1.10% and 1.40%, respectively. Thereafter, through April 30, 2006, each class is required to reimburse the manager for these expenses, provided that its average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed 1.10% for the Advisor Class and 1.40% for the R Class. Pursuant to this agreement, $6,000 of Advisor Class expenses and $1,000 of R Class expenses were borne by the manager during the six months ended June 30, 2003. At June 30, 2003, Advisor Class expenses in the amount of $6,000 and R Class expenses in the amount of $1,000 remain subject to reimbursement through April 30, 2006. In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates computes the daily share prices and maintains the financial records of the fund. T. Rowe Price Services, Inc. provides shareholder and administrative services in its capacity as the fund's transfer and dividend disbursing agent. T. Rowe Price Retirement Plan Services, Inc. provides subaccounting and recordkeeping services for certain retirement accounts invested in the Mid-Cap Value Fund class and R Class. Expenses incurred pursuant to these service agreements totaled $682,000 for the six months ended June 30, 2003, of which $142,000 was payable at period-end. Additionally, the fund is one of several mutual funds in which certain college savings plans managed by Price Associates may invest. As approved by the fund's Board of Directors, shareholder servicing costs associated with each college savings plan are borne by the fund in proportion to the average daily value of its shares owned by the college savings plan. For the six months ended June 30, 2003, the Mid-Cap Value class was charged $59,000 for shareholder servicing costs related to the college savings plans, of which $47,000 was for services provided by Price and $15,000 was payable at period-end. At June 30, 2003, approximately 2.7% of the outstanding shares of the Mid-Cap Value 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) may invest. The Spectrum Funds do not invest in the underlying Price funds for the purpose of exercising management or control. Pursuant to special servicing agreements, expenses associated with the operation of the Spectrum 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 Funds. Expenses allocated under these agreements are reflected as shareholder servicing expense in the accompanying financial statements. For the six months ended June 30, 2003, the Mid-Cap Value class was allocated $185,000 of Spectrum Funds' expenses, of which $134,000 related to services provided by Price and $70,000 was payable at period-end. At June 30, 2003, approximately 13.1% of the outstanding shares of the Mid-Cap Value class were held by the Spectrum Funds. The fund may invest in the T. Rowe Price Reserve Investment Fund and T. Rowe Price Government Reserve Investment Fund (collectively, the Reserve Funds), open-end management investment companies managed by Price Associates. The Reserve Funds are offered as cash management options only to mutual funds, trusts, and other accounts managed by Price Associates and/or its affiliates, and are not available to the public. The Reserve Funds pay no investment management fees. Distributions from the Reserve Funds to the fund for the six months ended June 30, 2003, totaled $325,000. Item 2. Code of Ethics. Not required at this time. Item 3. Audit Committee Financial Expert. Not required at this time. Item 4. Principal Accountant Fees and Services. Not required at this time. Item 5. Audit Committee of Listed Registrants. Not required at this time. Item 6. [Reserved] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. [Reserved] Item 9. Controls and Procedures (a) The registrant's principal executive officer and principal financial officer have evaluated the registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the registrant's disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. (b) The registrant's principal executive officer and principal financial officer are aware of no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10. Exhibits. (a)(1) Not required at this time. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (b) A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. T. Rowe Price Mid-Cap Value Fund, Inc. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date August 22, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date August 22, 2003 By /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer Date August 22, 2003