TRMCX TAMVX RRMVX TRMIX Mid-Cap Value

Transcription

aNNual
REPORT
December 31, 2015
T. Rowe Price
TRMCX
Mid-Cap Value Fund
TAMVX
Mid-Cap Value Fund–
Advisor Class
RRMVX
R Class
I Class
TRMIX
The fund invests in medium-sized companies
whose stocks appear to be out of favor or
undervalued.
T. R owe P rice M id- C ap V alue F und
HIGHLIGHTS
• Mid-cap stocks retreated in 2015 as losses in the last six months offset
a slight gain in the year’s first half.
• The Mid-Cap Value Fund fell slightly in 2015 but outpaced its Russell
benchmark and Lipper peer group index of similarly managed funds.
• The past year’s surge in mergers and acquisitions had a positive impact
on performance as several top contributors were acquisition targets.
• We anticipate that heightened market volatility and greater dispersion
in stock returns will yield a better stock-picking environment as we seek
fundamentally strong companies trading below their intrinsic value.
The views and opinions in this report were current as of December 31, 2015.
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 Value Fund
Manager’s Letter
Fellow Shareholders
U.S. stocks endured a volatile 2015 as fears about the global growth outlook intensified late in the year. Mounting evidence of economic weakness in China, sluggish
growth overseas, and a collapse in commodities prices added to uncertainty about
the timing of the Federal Reserve’s first rate hike since 2006. The broad U.S. market
as measured by the S&P 500 Index edged slightly higher in 2015, driven by strength
in a few technology-focused stocks. But in an environment characterized by narrow
market leadership, mid-cap stocks fell and lagged large-caps, while value stocks
trailed growth across all market capitalizations. Your fund posted a slight decline in
2015 but outpaced its benchmark and Lipper peer group index.
The Mid-Cap Value
Fund returned -6.30%
Total Return
and -3.41% for the six
Periods Ended 12/31/15 6 Months
12 Months
and 12 months ended
Mid-Cap Value Fund
-6.30%
-3.41%
December 31, 2015,
respectively, versus the
-5.17% and -4.78%
Advisor Class
-6.42
-3.65
returns of its benchmark,
Mid-Cap Value Fund–R Class -6.54
-3.91
the Russell Midcap
Russell Midcap Value Index -5.17
-4.78
Value Index, over the
Lipper Mid-Cap Value
same periods. The fund
Funds Index
-7.07
-5.01
exceeded the returns of
its peer group, the Lipper
Mid-Cap Value Funds
Index, for both periods. (Returns for the fund’s Advisor and R Class
shares were slightly lower due to their different fee structures.)
P erformance C omparison
For the year, stock selection in materials and health care drove the
fund’s outperformance versus the Russell index. An overweight to
health care, the best-performing sector, also lifted relative returns. On
the flip side, information technology detracted the most from relative
1
performance due to unfavorable stock selection and an underweight
allocation. The fund’s long-term relative performance remained
favorable, as recognized by Morningstar’s overall four-star rating
and its rank among competitive funds tracked by Lipper over longer
time periods. (Please refer to page 7 for additional information about
Morningstar ratings.) Based on cumulative total return, Lipper ranked
the Mid-Cap Value Fund 59 of 143, 69 of 115, 49 of 98, and 12 of
75 mid-cap value funds for the 1-, 3-, 5-, and 10-year periods ended
December 31, 2015, respectively. Past performance cannot guarantee
future results.
Market Environment
After posting a small gain in the first half of 2015, U.S. stocks fell into
correction territory for the first time since 2011 following China’s
surprise decision to devalue its currency in August. The yuan’s
depreciation reverberated across global commodities and currency
markets, pushing U.S. crude oil prices below $40 per barrel for the
first time since 2009 and many emerging markets currencies to record
lows against the dollar. Though U.S. stocks recovered from August’s
sell-off, volatility returned in the final weeks of 2015 as oil entered
another downturn. The dollar surged against most currencies over the
year as the Fed drew closer to a widely expected rate hike at the end
of 2015. Because a relatively strong dollar hurts
V alue vs. G rowth
the profitability of U.S.
Periods Ended 12/31/15
6 Months 12 Months
companies doing business
overseas, its appreciation
Russell Midcap Value Index
-5.17%
-4.78%
added to concerns about
Russell Midcap Growth Index
-4.20
-0.20
slowing corporate
earnings growth.
Mid-cap value stocks trailed growth in 2015, extending a streak of
underperformance in recent years. Part of last year’s underperformance
stems from value stocks’ greater exposure to cyclical sectors such as
energy, which performed poorly as oil and gas prices plummeted.
Over longer periods, however, mid-cap growth and value stocks have
performed roughly even. Six sectors declined and four advanced in
the Russell Midcap Value Index in 2015. Health care was the topperforming sector, adding roughly 8%, lifted by a wave of large buyout
deals. Consumer staples also posted a solid return, followed by slight
2
gains for financials and information technology. On the other hand,
energy and materials stocks posted double-digit losses as prices for oil,
gas, and precious metals kept falling throughout the year.
Portfolio and Strategy Review
Before reviewing the past year’s results, we would like to review our
investment strategy. The Mid-Cap Value Fund strives to buy and hold
undervalued, medium-sized companies with prospects for improved
performance. Stocks that are out of favor, neglected, or passed over
by other investors often end up being our best investments in the
long run. To find these candidates, we rely on the insightful research
of T. Rowe Price’s team of equity analysts. Businesses with strong
brands or market positions, experienced management, hidden or
underappreciated assets, and room for improved financial performance
are among the things we seek when evaluating a potential investment.
Because we are long-term investors, we can take advantage of the
valuation anomalies that often occur as companies take steps to fix
their problems and return to past levels of profitability. Unlike many
of our peers, we do not dwell on the short-term performance of
individual companies, the stock market, or the economy. Our skills
rest in identifying undervalued companies, which we typically hold for
a long time as we wait for them to reach their full potential.
One avenue through which value is sometimes realized in our portfolio
is through mergers and takeovers. Announced mergers and acquisitions (M&A) totaled a record $4.7 trillion in 2015. While much of
the surge was driven by a few megadeals exceeding $100 billion
involving big companies, the M&A wave made its way down to several
mid-size companies in your fund. Cablevision Systems was a notable
beneficiary of last year’s takeout boom. We have long owned a position
in Cablevision, a regional cable operator controlled by its founding
family, the Dolans. As one of the largest cable operators in the New
York metropolitan area, Cablevision owns a coveted business in a
rapidly consolidating industry. Recently, the company had begun to
show improved financial performance following initiatives it undertook
in previous years. Most investors doubted that the Dolans, who in the
past tried to take Cablevision private, would ever sell the company.
Our experience suggests that managements and boards of directors
eventually act in a way that serves their best economic interest in the
long run, and the family behind Cablevision proved to be no exception.
In September, European cable conglomerate Altice agreed to buy
3
Cablevision for a significant premium in a deal worth $17.7 billion,
validating our theory that Cablevision’s intrinsic value would ultimately
assert itself in the public market. Cablevision’s shares climbed 55% in
2015, and the company was one of our top contributors. (Please refer
to our portfolio of investments for a complete list of holdings and the
amount each represents in the portfolio.)
First Niagara Financial was another beneficiary of last year’s M&A
surge. Shares of this Buffalo, New York-based regional bank had
languished in recent years following a series of acquisitions it had
consummated under previous management. First Niagara shares
sank to multiyear lows in 2014 after announcing it would take an
$800 million charge to reduce the value of some of those acquisitions,
plus set aside millions more to compensate customers over a process
issue. While the news was not positive, we viewed it as a sign that the
new management was acting appropriately to resolve problems handed
down from the previous team’s overly aggressive
acquisition strategy. Moreover, we believed that First
Niagara’s network of roughly 400 branches in the
As with
northeastern U.S. would be attractive to an acquirer at a
Cablevision,
time of growing consolidation among regional lenders.
In essence, we saw a well-positioned bank that would
many investors either prevail as a more profitable independent entity
doubted Cintas’s or that would be acquired by an opportunistic suitor
if its shares continue to underperform. Our rationale
willingness to for owning First Niagara paid off in October, when
adapt, but we Cleveland-based KeyCorp announced that it would
acquire the bank for $4.1 billion. First Niagara shares
reasoned that climbed more than 30% last year, and we eliminated
sound strategic our position.
thinking would Like the Dolan family who acted in their best interest
by selling Cablevision, managers at Cintas—another
family-controlled company—took steps to ensure
their long-term economic well-being, to the surprise
of many investors. Cintas, the nation’s biggest provider of workplace
uniforms, expanded into the paper-shredding business a few years ago,
a move that led to years of suboptimal financial performance. In 2014,
however, management began the process of exiting the shredding
business and last October completed the sale of its stake in the venture,
allowing it to focus on its highly profitable businesses of supplying
uniforms, first aid supplies, and fire protection equipment. As with
Cablevision, many investors doubted Cintas’s willingness to adapt, but
we reasoned that sound strategic thinking would indeed prevail, which
proved to be the case for Cintas.
indeed prevail
4
Many of your fund’s biggest detractors fell victim to the collapse in
energy and commodity prices. Bunge, one of the world’s biggest
traders and processors of agricultural commodities, was one of several
companies in its industry struggling with slumping commodity prices
and weak global demand. Bunge has been trying to regain its footing
after a series of adverse events, including a costly expansion into the
Brazilian sugar business a few years ago that has contributed to steep
losses. Though Bunge’s financial results have been disappointing,
its chief executive who took over in 2013 has embarked on a
companywide review with the aim of improving returns on invested
capital, including possibly selling assets and undertaking other valuegenerating measures. We have long believed that Bunge’s stock price
undervalues the company’s businesses. For these reasons, we are
confident in Bunge’s longer-term outlook and maintain a significant
position in its shares.
Media companies endured a difficult 2015 amid mounting questions
about the long-term profitability of the pay TV industry as more
people forgo watching traditional TV in favor of digital video services
and other means of accessing desirable content. These concerns
contributed to the
weak performance of
S ector D iversification
Chicago-based broadcaster
Tribune Media. While
Percent of Net Assets
6/30/15 12/31/15
Tribune Media is not
immune from the secular
Financials
29.4%
26.5%
changes upending the
Consumer Discretionary
10.0
11.6
media industry, we believe
Consumer Staples
8.2
9.4
that the company’s stock
Health Care
11.5
9.4
price does not reflect
the intrinsic value of its
Industrials and Business Services 11.0
9.2
assets or management’s
Materials
8.1
8.3
potential to monetize
Energy
5.2
6.0
them. Besides being the
Utilities
5.5
5.3
nation’s biggest TV station
owner, Tribune Media
Information Technology
3.2
3.3
owns WGN-TV, which it
Telecommunication Services
0.7
0.6
is transforming into a new
Other and Reserves
7.2
10.4
cable network providing
Total
100.0%
100.0%
unique, original content;
real estate in several U.S.
Historical weightings reflect current industry/sector
cities; and strategic stakes
classifications.
5
in the Food Network channel and Careerbuilder.com. It also owns a
large and potentially valuable portfolio of broadcast spectrum, which
management will likely bid into the upcoming wireless spectrum
auction that the Federal Communications Commission will conduct
this spring. Tribune Media shares fell more than 30% in 2015, but we
took advantage of the decline to increase our position.
In Closing
Stock market volatility surged near the end of 2015 as worries
grew about China’s management of its economy and the collapse in
commodity prices. As of this writing, the volatility has shown few signs
of abating in 2016. The S&P 500 ended January down 5% as a renewed
sell-off in China’s stock market and global growth concerns continued
to rattle investors. Many mid-cap and small-cap stocks saw steeper
declines than their large-cap peers. We anticipate that volatility may
remain elevated for some time as last year’s headwinds—commodities
weakness, dollar strength, and uneven global growth—continue to
weigh on sentiment.
At the end of 2015, we regarded mid-cap stocks as relatively expensive, although the market’s recent pullback has pushed valuations
for many companies to levels that are closer to fair value. We are
encouraged to see that individual stock returns are showing greater
dispersion, even in the same sector—a welcome change from recent
years, when stocks within a sector tended to fall and rise in lockstep.
The heightened volatility and greater dispersion in stock returns
has yielded better stock-picking opportunities for our style of active
management by allowing us to buy our preferred companies at lower
prices. Regardless of the stock market’s day-to-day performance, we
are committed to our strategy of leveraging T. Rowe Price’s unique
research platform, investing in fundamentally attractive companies that
are trading below their intrinsic worth, and maintaining a focus on
long-term value.
6
Thank you for investing with T. Rowe Price.
Respectfully submitted,
David J. Wallack
President of the fund and chairman of its Investment Advisory Committee
January 30, 2016
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.
I mportant I nformation A bout M orningstar R atings
For funds with at least a 3-year history, a Morningstar Rating™ is based on a riskadjusted return measure (including the effects of sales charges, loads, and redemption
fees) with emphasis on downward variations and consistent performance. The top 10% of
funds in each category receive 5 stars, the next 22.5% 4 stars, the next 35% 3 stars, the
next 22.5% 2 stars, and the bottom 10% 1 star. Each share class is counted as a fraction
of one fund within this scale and rated separately. Morningstar Rating™ is for the retail
share class only; other classes may have different performance characteristics. The fund
received 3 stars for the 3-year period, 4 stars for the 5-year period, and 4 stars for the
10-year period as of December 31, 2015.
©2015 Morningstar, Inc. All Rights Reserved. The information contained herein:
(1) is proprietary to Morningstar and/or its content providers; (2) may not be copied
or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither
Morningstar nor its content providers are responsible for any damages or losses arising
from any use of this information.
7
R isks of I nvesting
The fund’s share price can fall because of weakness in the stock or bond markets, a
particular industry, or specific holdings. Stock 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.
Mid-caps typically offer greater return potential than larger established firms and
involve less risk than small-caps. Value investors seek to invest in companies whose
stock prices are low in relation to their real worth or future prospects. By identifying
companies whose stocks are currently out of favor or misunderstood, value investors
hope to realize significant appreciation as other investors recognize the stock’s intrinsic
value and the price rises accordingly. The value approach carries the risk that the market
will not recognize a security’s intrinsic value for a long time or that a stock judged to be
undervalued may actually be appropriately priced.
Glossary
Lipper indexes: Fund benchmarks that consist of a small number of the largest mutual
funds in a particular category as defined by Lipper Inc.
Russell Midcap Growth Index: An index that tracks the performance of mid-cap stocks
with higher price-to-book ratios and higher forecast growth values.
Russell Midcap Value Index: An index that tracks the performance of mid-cap stocks
with lower price-to-book ratios and lower forecast growth values.
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
12/31/15
Sysco
FirstEnergy
Northern Trust
Hologic
Vulcan Materials
2.7%
2.7
2.4
2.4
2.2
Bunge
Marsh & McLennan
Kellogg
Mattel
C.H. Robinson Worldwide
2.1
2.0
1.8
1.7
1.7
Kohl’s
White Mountains Insurance Group
Applied Materials
Cintas
Franco-Nevada
1.7
1.6
1.6
1.6
1.6
First Horizon National
E*TRADE Financial
News Corp
Quest Diagnostics
Rayonier
1.6
1.5
1.5
1.5
1.4
Fifth Third Bancorp
Murphy Oil
Textron
Macerich Company
Canadian Natural Resources
1.4
1.4
1.3
1.3
1.3
Total
44.0%
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
MAJOR PORTFOLIO CHANGES
Listed in descending order of size.
Six Months Ended 12/31/15
Largest Purchases
Fifth Third Bancorp*
Canadian Natural Resources*
Viacom*
Murphy Oil
Applied Materials
Hess
Baxter International*
Franco-Nevada
Archer-Daniels-Midland
Entergy*
*Position added.
**Position eliminated.
10
Largest Sales
Hospira**
Textron
First Niagara Financial**
Lazard
E*TRADE Financial
WPX Energy**
Cablevision Systems
CIT Group**
St. Joe
American Electric Power
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.
M I D - C A P VA LU E F U N D
As of 12/31/15
$30,000
Mid-Cap Value Fund $21,628
26,000
Russell Midcap Value Index $20,814
22,000
Lipper Mid-Cap Value Funds Index $19,587
18,000
14,000
10,000
12/05
12/06
12/07
12/08
12/09
12/10
12/11
12/12
12/13
12/14 12/15
Note: Performance for the Advisor, R, and I Classes will vary due to their differing fee structures.
See returns table below.
A verage A nnual C ompound T otal R eturn
Periods Ended 12/31/15
Mid-Cap Value Fund
1 Year
5 Years
10 Years
-3.41%
9.86%
8.02%
Mid-Cap Value Fund–Advisor Class
-3.65
9.59
7.77
Mid-Cap Value Fund–R Class
-3.91
9.30
7.49
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, R, and I 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 Value Fund
0.80%
Mid-Cap Value Fund–Advisor Class
1.04
Mid-Cap Value Fund–R Class
1.30
Mid-Cap Value Fund–I Class
0.65
The expense ratio shown is as of the fund’s fiscal year ended 12/31/14. The expense
ratio for the Mid-Cap Value Fund–I Class is estimated as of the class’s inception date of
8/28/15. 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, includes acquired fund
fees and expenses but 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 four share classes: The original share class (Investor Class)
charges no distribution and service (12b-1) fee, Advisor Class shares are offered only through
unaffiliated brokers and other financial intermediaries and charge a 0.25% 12b-1 fee, R Class
shares are available to retirement plans serviced by intermediaries and charge a 0.50% 12b-1
fee, and I Class shares are available to institutionally oriented clients and impose no 12b-1 or
administrative fee payment. 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
12
F und E xpense E xample ( continued )
example and the 5% hypothetical examples that appear in the shareholder reports of the
other funds. The hypothetical account values and expenses may not be used to estimate
the actual ending account balance or expenses you paid for the period.
Note: T. Rowe Price charges an annual 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 V alue F und
Investor Class
Actual
Beginning
Account Value
7/1/15
Ending Account Value
12/31/15
Expenses Paid
During Period
7/1/15 to
12/31/151
$1,000.00 $937.00
$3.91
Hypothetical (assumes 5%
return before expenses)
1,000.00 1,021.17
4.08
Advisor Class
Actual
1,000.00 935.80 5.07
1,000.00
1,019.96
5.30
R Class
Actual
1,000.00 934.60 6.34
1,000.00 1,018.65
6.61
13
F und E xpense E xample ( continued )
M id- C ap V alue F und ( continued )
I Class
Actual
Beginning
Account Value
8/31/152
Ending Account Value
12/31/15
Expenses Paid
During Period
8/31/15 to
12/31/152,3
$1,000.00 $993.80
$2.28
7/1/152
12/31/15
7/1/15 to
12/31/152,4
1,000.00 1,021.78
3.47
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 (365)
to reflect the half-year period. The annualized expense ratio of the Investor Class was
0.80%, the Advisor Class was 1.04%, and the R Class was 1.30%.
2
The actual expense example is based on the period since the fund’s start of operations
on 8/31/15, three days after inception; the hypothetical expense example is based on
the half-year period beginning 7/1/15, as required by the SEC.
3
Expenses are equal to the fund’s annualized expense ratio for the period, multiplied by
the average account value over the period, multiplied by the number of days in the
period (123), and divided by the days in the year (365) to reflect the period since the
fund’s start of operations. The annualized expense ratio of the I Class was 0.68%.
4
Expenses are equal to the fund’s annualized expense ratio for the 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 (365) to reflect the halfyear period. The annualized expense ratio of the I Class was 0.68%.
1
14
F inancial H ighlights
For a share outstanding throughout each period
Investor Class
Year
Ended
12/31/15 12/31/14 12/31/13 12/31/12 12/31/11
NET ASSET VALUE
Beginning of period
$ 28.82
$ 30.05
$ 24.04
$ 21.39
$ 23.71
0.32
0.30
0.22
0.31
0.20
(1.36)
(1.04)
2.71
3.01
7.30
7.52
3.87
4.18
(1.39)
(1.19)
(0.34)
(2.50)
(2.84)
(0.31)
(3.93)
(4.24)
(0.22)
(1.29)
(1.51)
(0.32)
(1.21)
(1.53)
(0.24)
(0.89)
(1.13)
Investment activities
Net investment income
(1)
Net realized and unrealized
gain / loss
Total from investment activities
Distributions
Net realized gain
Total distributions
NET ASSET VALUE
End of period
$ 24.94
$ 28.82
$ 30.05
$ 24.04
$ 21.39
(3.41)%
10.60%
31.54%
19.63%
(4.82)%
0.80%
0.80%
0.80%
0.81%
0.81%
Ratios/Supplemental Data
(2)
Total return
Ratio of total expenses to average net
assets
Ratio of net investment income to
average net assets
Portfolio turnover rate
Net assets, end of period
(in millions)
(1)
(2)
1.12%
45.8%
0.95%
32.2%
0.78%
32.0%
1.29%
43.7%
$ 10,107 $ 11,111 $ 10,599 $ 8,437
0.87%
53.6%
$ 7,559
Per share amounts calculated using average shares outstanding method.
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.
15
Advisor Class
Year
Ended
12/31/15 12/31/14 12/31/13 12/31/12 12/31/11
NET ASSET VALUE
Beginning of period
$ 28.69
$ 29.93
$ 23.94
$ 21.31
$ 23.61
0.25
0.22
0.14
0.24
0.15
(1.35)
(1.10)
2.70
2.92
7.28
7.42
3.85
4.09
(1.38)
(1.23)
(0.25)
(2.50)
(2.75)
(0.23)
(3.93)
(4.16)
(0.14)
(1.29)
(1.43)
(0.25)
(1.21)
(1.46)
(0.18)
(0.89)
(1.07)
(1)
Net realized and unrealized gain /
loss
Distributions
Net realized gain
Total distributions
NET ASSET VALUE
End of period
$ 24.84
$ 28.69
$ 29.93
$ 23.94
$ 21.31
(3.65)%
10.33%
31.23%
19.27%
(5.02)%
1.05%
1.04%
1.06%
1.05%
1.04%
(2)
Total return
assets
average net assets
(in thousands)
(1)
(2)
0.87%
45.8%
0.70%
32.2%
0.52%
32.0%
1.03%
43.7%
0.63%
53.6%
$ 446,517 $ 735,224 $ 644,950 $ 568,987 $ 549,847
during each period, assuming reinvestment of all distributions.
16
R Class
Year
Ended
12/31/15 12/31/14 12/31/13 12/31/12 12/31/11
NET ASSET VALUE
Beginning of period
$ 28.35
$ 29.61
$ 23.70
$ 21.11
$ 23.40
0.17
0.14
0.07
0.18
0.08
(1.33)
(1.16)
2.67
2.81
7.20
7.27
3.81
3.99
(1.36)
(1.28)
(0.17)
(2.50)
(2.67)
(0.14)
(3.93)
(4.07)
(0.07)
(1.29)
(1.36)
(0.19)
(1.21)
(1.40)
(0.12)
(0.89)
(1.01)
(1)
Net realized and unrealized gain /
loss
Distributions
Net realized gain
Total distributions
NET ASSET VALUE
End of period
$ 24.52
$ 28.35
$ 29.61
$ 23.70
$ 21.11
(3.91)%
10.06%
30.90%
18.98%
(5.29)%
1.30%
1.30%
1.31%
1.32%
1.33%
(2)
Total return
assets
average net assets
(in thousands)
(1)
(2)
0.61%
45.8%
0.44%
32.2%
0.27%
32.0%
0.75%
43.7%
$ 218,215 $ 303,044 $ 333,031 $ 284,321 $ 280,716
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.
17
0.34%
53.6%
For a share outstanding throughout the period
I Class
8/28/15
Through
12/31/15
NET ASSET VALUE
Beginning of period
$ 28.01
(1)
Net realized and unrealized gain / loss
Distributions
Net realized gain
Total distributions
0.12
(0.35)
(0.23)
(0.35)
(2.50)
(2.85)
NET ASSET VALUE
End of period
$ 24.93
(2)
Total return
(0.62)%
Ratio of total expenses to average net assets
0.68%
(3)
Ratio of net investment income to average net assets
1.45%
(3)
45.8%
Net assets, end of period (in thousands)
$ 130,398
(1)
(2)
(3)
during the period, assuming reinvestment of all distributions and payment of no redemption
or account fees. Total return is not annualized for periods less than one year.
Annualized
18
December 31, 2015
P ortfolio of I nvestments
‡
Shares
$ Value
1,570,100
94,394
(Cost and value in $000s)
COMMON STOCKS 89.6%
CONSUMER DISCRETIONARY 10.8%
Diversified Consumer Services 0.9%
Strayer Education (1)(2)
94,394
Leisure Products 1.9%
Mattel
Sankyo-Gunma (JPY)
6,920,400
188,027
431,500
16,095
204,122
Media 5.1%
Cablevision Systems, Class A
2,476,600
79,003
12,413,561
165,845
Scholastic
1,580,291
60,936
Tribune Media
4,002,000
135,308
Viacom, Class B
2,948,900
121,377
News Corp, Class A
562,469
Multiline Retail 1.7%
Kohl's
3,808,500
181,399
181,399
Specialty Retail 0.3%
Gap
1,455,300
35,946
35,946
Textiles, Apparel & Luxury Goods 0.9%
Coach
2,903,800
95,041
95,041
Total Consumer Discretionary
19
1,173,371
Shares
$ Value
888,896
78,592
CONSUMER STAPLES 9.4%
Beverages 0.7%
Carlsberg, Series B (DKK)
78,592
Food & Staples Retailing 2.7%
Sysco
7,217,400
295,913
295,913
Food Products 5.9%
Archer-Daniels-Midland
2,897,400
106,277
Bunge Limited
3,368,600
230,008
313,808
5,382
90,908
1,953
2,643,900
191,075
870,900
74,514
1,116,177
35,260
Dean Foods
Flowers Foods
Kellogg
McCormick
Tootsie Roll Industries
644,469
Household Products 0.1%
Clorox
38,197
4,845
4,845
1,023,819
Total Consumer Staples
ENERGY 4.8%
Energy Equipment & Services 0.4%
SEACOR Holdings (1)(2)
880,797
46,295
46,295
Oil, Gas & Consumable Fuels 4.4%
Cameco
6,947,100
85,658
Canadian Natural Resources
6,425,600
140,271
CONSOL Energy
1,026,703
8,111
20
Shares
$ Value
Hess
2,046,400
99,209
Murphy Oil
6,556,500
147,193
480,442
526,737
Total Energy
FINANCIALS 25.4%
Banks 4.5%
Commerce Bancshares
Fifth Third Bancorp
First Horizon National (1)
Popular
SunTrust
WestAmerica Bank (1)
523,246
22,259
7,404,300
148,826
11,658,744
169,285
1,619,800
45,905
904,200
38,736
1,513,707
70,766
495,777
Capital Markets 4.7%
E*TRADE Financial (2)
Lazard, Class A, Partnership
5,622,860
166,662
142,900
6,432
Northern Trust
3,662,540
264,032
Waddell & Reed Financial, Class A
2,771,290
79,425
516,551
Consumer Finance 1.1%
Ally Financial (2)
6,222,290
115,984
115,984
Diversified Financial Services 0.2%
Groupe Bruxelles Lambert (EUR)
233,974
20,005
20,005
Insurance 9.9%
CNA Financial
3,515,700
123,577
First American Financial
2,927,124
105,084
FNF
3,265,124
113,202
21
Shares
$ Value
Kemper
1,992,443
74,218
Loews
3,525,093
135,363
Marsh & McLennan
3,966,800
219,959
Progressive
4,121,700
131,070
246,255
178,981
White Mountains Insurance Group
1,081,454
Real Estate Investment Trusts 3.6%
AvalonBay Communities, REIT
46,700
8,599
Macerich Company, REIT
1,749,192
141,142
Rayonier, REIT (1)
6,711,300
148,991
Washington REIT
1,071,900
29,006
Weyerhaeuser, REIT
2,026,000
60,739
388,477
Real Estate Management & Development 0.0%
St. Joe (2)
104,103
1,927
1,927
Thrifts & Mortgage Finance 1.4%
Capitol Federal Financial
6,221,485
PHH (1)(2)
4,557,800
78,142
73,836
151,978
2,772,153
Total Financials
HEALTH CARE 9.4%
Biotechnology 1.1%
Baxalta
1,029,400
40,177
Seattle Genetics (2)
1,707,244
76,621
116,798
Health Care Equipment & Supplies 4.2%
Baxter International
2,590,600
98,831
Haemonetics (2)
2,100,700
67,727
22
Shares
$ Value
Halyard Health (2)
1,003,768
33,536
Hologic (2)
6,682,833
258,559
458,653
Health Care Providers & Services 3.2%
HealthSouth
1,736,757
60,456
Quest Diagnostics
2,248,900
159,987
Select Medical Holdings (1)
8,899,465
105,993
825,899
25,025
Tenet Healthcare (2)
351,461
Pharmaceuticals 0.9%
Zoetis
1,956,500
93,755
93,755
1,020,667
Total Health Care
INDUSTRIALS & BUSINESS SERVICES 7.9%
Aerospace & Defense 1.3%
Textron
3,440,398
144,531
144,531
Air Freight & Logistics 2.4%
C.H. Robinson Worldwide
3,027,700
187,778
Expeditors International of Washington
1,641,400
74,027
261,805
Commercial Services & Supplies 1.6%
Cintas
1,936,600
176,327
176,327
Construction & Engineering 1.2%
KBR (1)
7,679,608
129,939
129,939
23
Shares
$ Value
2,244,400
81,921
Machinery 0.8%
Xylem
81,921
Professional Services 0.5%
ManpowerGroup
661,100
55,724
55,724
Trading Companies & Distributors 0.1%
Fastenal
315,900
12,895
12,895
863,142
Total Industrials & Business Services
INFORMATION TECHNOLOGY 3.4%
Communications Equipment 0.4%
ADTRAN (1)
2,488,300
42,849
42,849
Electronic Equipment, Instruments & Components 0.5%
AVX
3,951,700
47,974
47,974
IT Services 0.2%
Western Union
1,098,403
19,672
19,672
Semiconductor & Semiconductor Equipment 2.3%
Applied Materials
9,454,900
Marvell Technology Group
8,843,703
176,523
78,001
254,524
Total Information Technology
24
365,019
Shares
$ Value
1,337,412
86,276
MATERIALS 8.2%
Chemicals 0.8%
Scotts Miracle Gro
86,276
Construction Materials 2.2%
Vulcan Materials
2,563,900
243,494
243,494
Containers & Packaging 0.8%
Packaging Corporation of America
Westrock
1,078,800
68,018
445,742
20,335
88,353
Metals & Mining 3.3%
Franco-Nevada (CAD)
3,701,300
169,323
Newmont Mining
7,262,900
130,660
Nucor
1,423,900
57,383
357,366
Paper & Forest Products 1.1%
Louisiana Pacific (2)
6,456,400
116,280
116,280
891,769
Total Materials
TELECOMMUNICATION SERVICES 0.6%
Wireless Telecommunication Services 0.6%
Telephone & Data Systems
2,546,283
65,923
65,923
Total Telecommunication Services
UTILITIES 5.3%
Electric Utilities 3.6%
American Electric Power
25
1,022,600
59,587
Shares
$ Value
646,200
44,174
Entergy
FirstEnergy
9,270,190
294,143
397,904
Independent Power & Renewable Electricity Producers 0.9%
AES
9,686,400
92,699
92,699
Multi-Utilities 0.8%
CenterPoint Energy
1,202,700
22,082
NiSource
3,581,341
69,872
91,954
Total Utilities
582,557
Total Miscellaneous Common Stocks 4.4% (3)
477,768
9,762,925
Total Common Stocks (Cost $8,636,630)
SHORT-TERM INVESTMENTS 10.9%
Money Market Funds 10.9%
T. Rowe Price Reserve Investment Fund, 0.22% (1)(4)
Total Short-Term Investments (Cost $1,191,770)
1,191,769,892
1,191,770
1,191,770
Total Investments in Securities
100.5% of Net Assets (Cost $9,828,400)
‡
(1)
(2)
(3)
(4)
CAD
DKK
EUR
$ 10,954,695
Shares are denominated in U.S. dollars unless otherwise noted.
Affiliated Company
Non-income producing
The identity of certain securities has been concealed to protect the fund while it
completes a purchase or selling program for the securities.
Seven-day yield
Canadian Dollar
Danish Krone
Euro
26
JPY Japanese Yen
REIT A domestic Real Estate Investment Trust whose distributions pass-through with
original tax character to the shareholder
27
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, 2015. Purchase and sales cost and investment income reflect all
activity for the period then ended.
Purchase
Cost
Affiliate
ADTRAN
First American Financial
First Horizon National
KBR
Kemper
OneBeacon Insurance
Group, Class A
PHH
Rayonier, REIT
Scholastic
SEACOR Holdings
Select Medical Holdings
St. Joe
Strayer Education
28
$
Sales
Cost
Investment
Income
Value
12/31/15
Value
12/31/14
2,455 $
—
—
28,195
6,190
8,268 $
44,616
968
6,941
31,050
1,011 $
4,063
2,801
2,399
2,351
42,849 $
*
169,285
129,939
*
59,451
188,759
159,404
*
99,174
1,952
—
42,025
17,787
28,252
10,269
25,441
13,997
19,559
—
—
21,141
—
—
82,714
—
335
—
5,882
1,073
—
824
—
—
—
73,836
148,991
*
46,295
105,993
*
94,394
20,640
109,205
*
61,091
*
115,853
*
98,540
Affiliated Companies (continued)
($000s)
Affiliate
Purchase
Cost
Sales
Cost
Investment
Income
Value
12/31/15
Value
12/31/14
—
14,718
—
228,420
2,316
—
70,766
—
74,202
158,901
¤
¤
922
1,191,770
1,269,606
WestAmerica Bank
WPX Energy
T. Rowe Price Reserve
Investment Fund
Totals
$
23,977 $ 2,074,118 $ 2,414,826
* 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
$ 2,131,954
Dividend income
Interest income
23,977
—
Investment income
$
23,977
Realized gain (loss) on securities
$
(46,340)
Capital gain distributions from mutual
funds
$
—
29
December 31, 2015
S tatement of A ssets and L iabilities
($000s, except shares and per share amounts)
Assets
Investments in securities, at value (cost $9,828,400)
$ 10,954,695
Receivable for shares sold
23,281
Dividends receivable
11,813
Receivable for investment securities sold
3,541
Cash
1,412
Foreign currency (cost $862)
867
Other assets
448
Total assets
10,996,057
Liabilities
Payable for shares redeemed
65,487
Payable for investment securities purchased
20,025
Investment management fees payable
6,033
Due to affiliates
675
Other liabilities
1,354
Total liabilities
93,574
NET ASSETS
$ 10,902,483
Net Assets Consist of:
Accumulated undistributed net realized loss
$
(63,863)
Net unrealized gain
1,126,280
Paid-in capital applicable to 437,413,474 shares of $0.0001 par
value capital stock outstanding; 1,000,000,000 shares authorized
9,840,066
NET ASSETS
30
$ 10,902,483
December 31, 2015
S tatement of A ssets and L iabilities
NET ASSET VALUE PER SHARE
Investor Class
($10,107,353,745 / 405,305,518 shares outstanding)
$
24.94
Advisor Class
($446,516,716 / 17,977,647 shares outstanding)
$
24.84
R Class
$
24.52
I Class
$
24.93
31
S tatement of O perations
($000s)
Year
Ended
12/31/15
Investment Income (Loss)
Income
Dividend
Interest
$
Total income
Expenses
Investment management
Shareholder servicing
Investor Class
Advisor Class
R Class
I Class
Rule 12b-1 fees
Advisor Class
R Class
Prospectus and shareholder reports
Investor Class
Advisor Class
R Class
I Class
Custody and accounting
Registration
Legal and audit
Directors
Miscellaneous
Total expenses
32
226,657
1,028
227,685
75,979
$
16,286
828
423
3
17,540
1,390
1,348
2,738
232
19
2
1
254
424
244
95
54
37
97,365
130,320
S tatement of O perations
($000s)
Year
Ended
12/31/15
Realized and Unrealized Gain / Loss
Net realized gain (loss)
Securities
Foreign currency transactions
1,106,397
(446)
Net realized gain
1,105,951
Change in net unrealized gain / loss
Securities
Other assets and liabilities denominated in foreign currencies
(1,619,035)
(11)
(1,619,046)
Net realized and unrealized gain / loss
(513,095)
DECREASE IN NET ASSETS FROM OPERATIONS
33
$
(382,775)
S tatement of C hanges in N et A ssets
($000s)
Year
Ended
12/31/15
12/31/14
Increase (Decrease) in Net Assets
Operations
Net realized gain
Increase (decrease) in net assets from
operations
Distributions to shareholders
Investor Class
Advisor Class
R Class
I Class
Net realized gain
Investor Class
Advisor Class
R Class
I Class
Decrease in net assets from distributions
Capital share transactions*
Shares sold
Investor Class
Advisor Class
R Class
I Class
Distributions reinvested
Investor Class
Advisor Class
R Class
I Class
Shares redeemed
Investor Class
Advisor Class
R Class
I Class
Increase in net assets from capital share
transactions
34
$
130,320
1,105,951
(1,619,046)
(382,775)
$
110,432
1,313,990
(222,047)
1,202,375
(125,195)
(4,205)
(1,427)
(1,411)
(105,006)
(5,564)
(1,325)
–
(920,534)
(42,052)
(20,978)
(10,077)
(1,125,879)
(1,331,244)
(95,070)
(37,181)
–
(1,575,390)
1,056,341
62,805
25,341
143,606
1,668,191
360,939
39,990
–
987,680
45,665
22,348
3,604
1,339,661
99,745
38,447
–
(1,644,129)
(337,367)
(101,087)
(3,413)
261,394
(2,155,330)
(345,154)
(100,548)
–
945,941
S tatement of C hanges in N et A ssets
($000s)
Year
Ended
12/31/15
12/31/14
(1,247,260)
12,149,743
572,926
11,576,817
Net Assets
Increase (decrease) during period
Beginning of period
End of period
$
Undistributed net investment income
*Share information
Shares sold
Investor Class
Advisor Class
R Class
I Class
Distributions reinvested
Investor Class
Advisor Class
R Class
I Class
Shares redeemed
Investor Class
Advisor Class
R Class
I Class
Increase in shares outstanding
35
10,902,483
$
12,149,743
–
–
36,701
2,185
893
5,215
54,023
11,624
1,298
–
40,396
1,875
929
147
48,417
3,620
1,413
–
(57,349)
(11,709)
(3,613)
(132)
15,538
(69,624)
(11,168)
(3,268)
–
36,335
December 31, 2015
N otes to F inancial S tatements
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-sized companies that appear to be
undervalued. The fund has four classes of shares: the Mid-Cap Value Fund
original share class, referred to in this report as the Investor Class, offered since
June 28, 1996; the Mid-Cap Value Fund–Advisor Class (Advisor Class), offered
since September 30, 2002; the Mid-Cap Value Fund–R Class (R Class), offered
since September 30, 2002; and the Mid-Cap Value Fund–I Class (I Class),
offered since August 28, 2015. 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. I Class
shares generally are available only to investors meeting a $1,000,000 minimum
investment or certain other criteria. 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; the Investor and I Classes do not pay
Rule 12b-1 fees. 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 fund is an investment company and follows accounting
and reporting guidance in the Financial Accounting Standards Board (FASB)
Accounting Standards Codification Topic 946 (ASC 946). The accompanying
financial statements were prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP), including, but not
limited to, ASC 946. GAAP requires 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. Earnings on investments recognized as
36
partnerships for federal income tax purposes reflect the tax character of such
earnings. 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 on the identified
cost basis. Distributions to shareholders are recorded on the ex-dividend date.
Distributions from REITs are initially recorded as dividend income and, to the
extent such represent a return of capital or capital gain for tax purposes, are
reclassified when such information becomes available. 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 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. 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.
Rebates 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
$378,000 for the year ended December 31, 2015.
New Accounting Guidance In May 2015, FASB issued ASU No. 2015-07, Fair
Value Measurement (Topic 820), Disclosures for Investments in Certain Entities
That Calculate Net Asset Value per Share (or Its Equivalent). The ASU removes
the requirement to categorize within the fair value hierarchy all investments
for which fair value is measured using the net asset value per share practical
expedient and amends certain disclosure requirements for such investments.
37
The ASU is effective for interim and annual reporting periods beginning after
December 15, 2015. Adoption will have no effect on the fund’s net assets or
results of operations.
Note 2 - VALUATION
The fund’s financial instruments are valued and each class’s net asset value
(NAV) per share is computed at the close of the New York Stock Exchange
(NYSE), normally 4 p.m. ET, each day the NYSE is open for business.
Fair Value The fund’s financial instruments are reported at fair value, which
GAAP defines as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the
measurement date. The T. Rowe Price Valuation Committee (the Valuation
Committee) has been established by the fund’s Board of Directors (the Board)
to ensure that financial instruments are appropriately priced at fair value in
accordance with GAAP and the 1940 Act. Subject to oversight by the Board,
the Valuation Committee develops and oversees pricing-related policies
and procedures and approves all fair value determinations. Specifically, the
Valuation Committee establishes procedures to value securities; determines
pricing techniques, sources, and persons eligible to effect fair value pricing
actions; oversees the selection, services, and performance of pricing vendors;
oversees valuation-related business continuity practices; and provides guidance
on internal controls and valuation-related matters. The Valuation Committee
reports to the Board and has representation from legal, portfolio management
and trading, operations, risk management, and the fund’s treasurer.
Various valuation techniques and inputs are used to determine the fair value of
financial instruments. GAAP establishes the following fair value hierarchy that
categorizes the inputs used to measure fair value:
Level 1 – quoted prices (unadjusted) in active markets for identical financial
instruments that the fund can access at the reporting date
Level 2 – inputs other than Level 1 quoted prices that are observable, either
directly or indirectly (including, but not limited to, quoted prices
for similar financial instruments in active markets, quoted prices for
identical or similar financial instruments in inactive markets, interest
rates and yield curves, implied volatilities, and credit spreads)
Level 3 – unobservable inputs
38
Observable inputs are developed using market data, such as publicly available
information about actual events or transactions, and reflect the assumptions that
market participants would use to price the financial instrument. Unobservable
inputs are those for which market data are not available and are developed using
the best information available about the assumptions that market participants
would use to price the financial instrument. GAAP requires valuation techniques
to maximize the use of relevant observable inputs and minimize the use of
unobservable inputs. When multiple inputs are used to derive fair value, the
financial instrument is assigned to the level within the fair value hierarchy based
on the lowest-level input that is significant to the fair value of the financial
instrument. Input levels are not necessarily an indication of the risk or liquidity
associated with financial instruments at that level but rather the degree of judgment used in determining those values.
Valuation Techniques 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. OTC Bulletin Board securities are valued at the mean of the
closing 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 closing bid and asked prices for domestic
securities and the last quoted sale or closing price for international securities.
For valuation purposes, the last quoted prices of non-U.S. equity securities may
be adjusted to reflect the fair value of such securities at the close of the NYSE.
If the fund determines that developments between the close of a foreign market
and the close of the NYSE will, in its judgment, materially affect the value of
some or all of its portfolio securities, the fund will adjust the previous quoted
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 quoted 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. The 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 quoted prices
and information to evaluate or adjust those prices. The fund cannot predict
how often it will use quoted prices and how often it will determine it necessary
39
to adjust those prices to reflect fair value. As a means of evaluating its security
valuation process, the fund routinely compares quoted prices, the next day’s
opening prices in the same markets, and adjusted prices.
Actively traded equity securities listed on a domestic exchange generally are
categorized in Level 1 of the fair value hierarchy. Non-U.S. equity securities
generally are categorized in Level 2 of the fair value hierarchy despite the
availability of quoted prices because, as described above, the fund evaluates
and determines whether those quoted prices reflect fair value at the close of the
NYSE or require adjustment. OTC Bulletin Board securities, certain preferred
securities, and equity securities traded in inactive markets generally are
categorized in Level 2 of the fair value hierarchy.
Investments in mutual funds are valued at the mutual fund’s closing NAV per
share on the day of valuation and are categorized in Level 1 of the fair value
hierarchy. Assets and liabilities other than financial instruments, including
short-term receivables and payables, are carried at cost, or estimated realizable
value, if less, which approximates fair value.
Thinly traded financial instruments and those for which the above valuation
procedures are inappropriate or are deemed not to reflect fair value are stated at
fair value as determined in good faith by the Valuation Committee. The objective of any fair value pricing determination is to arrive at a price that could
reasonably be expected from a current sale. Financial instruments fair valued by
the Valuation Committee are primarily private placements, restricted securities,
warrants, rights, and other securities that are not publicly traded.
Subject to oversight by the Board, the Valuation Committee regularly
makes good faith judgments to establish and adjust the fair valuations of
certain securities as events occur and circumstances warrant. For instance,
in determining the fair value of an equity investment with limited market
activity, such as a private placement or a thinly traded public company stock,
the Valuation Committee considers a variety of factors, which may include,
but are not limited to, the issuer’s business prospects, its financial standing
and performance, recent investment transactions in the issuer, new rounds of
financing, negotiated transactions of significant size between other investors in
the company, relevant market valuations of peer companies, strategic events
affecting the company, market liquidity for the issuer, and general economic
conditions and events. In consultation with the investment and pricing teams,
the Valuation Committee will determine an appropriate valuation technique
based on available information, which may include both observable and
40
unobservable inputs. The Valuation Committee typically will afford greatest
weight to actual prices in arm’s length transactions, to the extent they represent
orderly transactions between market participants, transaction information
can be reliably obtained, and prices are deemed representative of fair value.
However, the Valuation Committee may also consider other valuation methods
such as market-based valuation multiples; a discount or premium from market
value of a similar, freely traded security of the same issuer; or some combination. Fair value determinations are reviewed on a regular basis and updated as
information becomes available, including actual purchase and sale transactions
of the issue. Because any fair value determination involves a significant amount
of judgment, there is a degree of subjectivity inherent in such pricing decisions,
and fair value prices determined by the Valuation Committee could differ from
those of other market participants. Depending on the relative significance of
unobservable inputs, including the valuation technique(s) used, fair valued
securities may be categorized in Level 2 or 3 of the fair value hierarchy.
Valuation Inputs The following table summarizes the fund’s financial
instruments, based on the inputs used to determine their fair values on
December 31, 2015:
Level 1
($000s)
Quoted
Prices
Investments in Securities,
except:
Common Stocks
Total
$
Level 2
Level 3
Total Value
Significant
Significant
Observable Unobservable
Inputs
Inputs
1,191,770 $
9,288,896
$ 10,480,666 $
— $
— $
1,191,770
474,029
—
9,762,925
474,029 $
— $ 10,954,695
There were no material transfers between Levels 1 and 2 during the year ended
December 31, 2015.
Note 3 - OTHER Investment Transactions
Purchases and sales of portfolio securities other than short-term securities
aggregated $4,921,733,000 and $5,540,159,000, respectively, for the year
ended December 31, 2015.
41
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 a tax practice that treats a
portion of the proceeds from each redemption of capital shares as a distribution
of taxable net investment income or realized capital gain. Reclassifications
between income and gain relate primarily to per share rounding of distributions.
For the year ended December 31, 2015, 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
$
Undistributed net realized gain
(109,560)
1,918
Paid-in capital
107,642
Distributions during the years ended December 31, 2015 and December 31,
2014, were characterized for tax purposes as follows:
($000s)
December 31
2015
2014
Ordinary income
$
144,162
$
204,993
Long-term capital gain
981,717
1,370,397
Total distributions
$ 1,125,879
42
$ 1,575,390 T. Rowe Price Mid-Cap Value Fund
At December 31, 2015, the tax-basis cost of investments and components of net
assets were as follows:
($000s)
Cost of investments
$
9,898,013
Unrealized appreciation
$
1,875,878
Unrealized depreciation
Net unrealized appreciation (depreciation)
1,056,667
Undistributed long-term capital gain
6,286
Late-year ordinary loss deferrals
Paid-in capital
9,840,066
$
10,902,483
Net assets
(819,211)
(536)
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. During the year ended December 31, 2015, the fund utilized
$5,891,000 of capital loss carryforwards. In accordance with federal tax laws
applicable to investment companies, specified net losses realized between
November 1 and December 31 are not recognized for tax purposes until the
subsequent year (late-year ordinary loss deferrals); however, such losses are
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, equal to 0.35%
of the fund’s average daily net assets, and a group fee. 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 0.275% for assets
in excess of $400 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, 2015, the
effective annual group fee rate was 0.29%.
43
The I Class is subject to an operating expense limitation (I Class limit) pursuant
to which Price Associates is contractually required to pay all operating expenses
of the I Class, excluding management fees, interest, borrowing-related expenses,
taxes, brokerage commissions, and extraordinary expenses, to the extent such
operating expenses, on an annualized basis, exceed 0.05% of average net assets.
This agreement will continue until April 30, 2018, and may be renewed, revised
or revoked only with approval of the fund’s Board. The I Class is required to
repay Price Associates for expenses previously paid to the extent the class’s
net assets grow or expenses decline sufficiently to allow repayment without
causing the class’s operating expenses to exceed the I Class limit. However, no
repayment will be made more than three years after the date of a payment or
waiver. For the year ended December 31, 2015, the I Class operated below its
expense limitation.
In addition, the fund has entered into service agreements with Price Associates
and two wholly owned subsidiaries of Price Associates (collectively, Price).
Price Associates provides certain accounting and 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 subaccounting and
recordkeeping services for certain retirement accounts invested in the Investor
Class and R Class. For the year ended December 31, 2015, expenses incurred
pursuant to these service agreements were $107,000 for Price Associates;
$2,010,000 for T. Rowe Price Services, Inc.; and $1,688,000 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, 2015, the fund was charged $464,000 for shareholder
servicing costs related to the college savings plans, of which $328,000 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, 2015, approximately 2% of the outstanding shares
of the Investor Class were held by college savings plans.
44
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), as well as the T. Rowe Price Retirement Funds and T. Rowe
Price Target 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 Funds 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 Funds 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, 2015, the fund was allocated $127,000 of
Spectrum Funds’ expenses and $6,319,000 of Retirement Funds’ expenses. Of
these amounts, $2,614,000 related to services provided by Price. At period-end,
the amount payable to Price pursuant to this agreement is reflected as Due to
Affiliates in the accompanying financial statements. At December 31, 2015,
approximately 1% of the outstanding shares of the Investor Class were held by
the Spectrum Funds and 34% were held by the Retirement Funds.
In addition, other mutual funds, trusts, and other accounts managed by Price
Associates or its affiliates (collectively, Price funds and accounts) may invest
in the fund; however, no Price fund or account may invest for the purpose
of exercising management or control over the fund. At December 31, 2015,
approximately 6% of the I Class’s outstanding shares were held by Price funds
and accounts.
The fund may invest in the T. Rowe Price Reserve Investment Fund, the
T. Rowe Price Government Reserve Investment Fund, or the T. Rowe Price
Short-Term Reserve Fund (collectively, the Price Reserve Investment Funds),
open-end management investment companies managed by Price Associates
and considered affiliates of the fund. The Price Reserve Investment Funds are
offered as short-term investment options to mutual funds, trusts, and other
accounts managed by Price Associates or its affiliates and are not available for
direct purchase by members of the public. The Price Reserve Investment Funds
pay no investment management fees.
As of December 31, 2015, T. Rowe Price Group, Inc., or its wholly owned
subsidiaries owned 8,926 shares of the I Class representing less than 1% of the
fund’s net assets.
45
Note 6 - LITIgation
The fund is a named defendant or in a class of defendants in a lawsuit that the
Unsecured Creditors Committee (the Committee) of the Tribune Company
has filed in Delaware bankruptcy court. The Committee is seeking to recover
all payments made to beneficial owners of common stock in connection with
a leveraged buyout of Tribune, including those made in connection with a
2007 tender offer in which the fund participated. The fund also is named as
a defendant or included in a class of defendants in parallel litigation, which
has been dismissed by the district court and is currently on appeal, asserting
state law constructive fraudulent transfer claims to recover stock redemption
payments made to shareholders. The complaints allege no misconduct by the
fund, and management intends to vigorously defend the lawsuits. The value of
the proceeds received by the fund is $70,070,000 (0.64% of net assets), and the
fund will incur legal expenses. Management is currently assessing the case and
has not yet determined the effect, if any, on the fund’s net assets and results
of operations.
46
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 Value 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 Value Fund, Inc. (the
“Fund”) at December 31, 2015, 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, 2015 by correspondence with the custodian and brokers, and
confirmation of the underlying fund by correspondence with the transfer agent,
provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 17, 2016
47
T ax I nformation (U naudited ) for the T ax Y ear E nded 12/31/15
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:
• $13,842,000 from short-term capital gains,
• $1,089,359,000 from long-term capital gains, of which $1,088,800,000 was subject to
a long-term capital gains tax rate of not greater than 20%, and $559,000 to a long-term
capital gains tax rate of not greater than 25%.
For taxable non-corporate shareholders, $136,077 of the fund’s income represents
qualified dividend income subject to a long-term capital gains tax rate of not greater
than 20%.
For corporate shareholders, $136,077 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. You may request this document 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 “Social Responsibility” at the top of our
corporate homepage. Next, click on the words “Conducting Business Responsibly” on the
left side of the page that appears. Finally, click on the words “Proxy Voting Policies” on the
left side of the page that appears.
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 above directions
to reach the “Conducting Business Responsibly” page. Click on the words “Proxy Voting
Records” on the left side of that page, and then click on the “View Proxy Voting Records”
link at the bottom of the page that appears.
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.
48
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 or potentially affecting the fund, including performance, investment programs,
compliance matters, advisory fees and expenses, service providers, and business and regulatory
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. President and Trustee, Salk Institute for Biological Studies (2009 to
(1944)
present); Director, BioMed Realty Trust (2013 to present); Director,
2009
Novartis, Inc. (2009 to 2014); Director, IBM (2007 to present)
[181]
Anthony W. Deering
(1945)
2001
[181]
Chairman, Exeter Capital, LLC, a private investment firm (2004 to
present); Director, Brixmor Real Estate Investment Trust (2012 to
present); Director and Advisory Board Member, Deutsche Bank
North America (2004 to present); Director, Under Armour (2008
to present); Director, Vornado Real Estate Investment Trust (2004
to 2012)
Bruce W. Duncan
(1951)
2013
[181]
President, Chief Executive Officer, and Director, First Industrial
Realty Trust, an owner and operator of industrial properties (2009 to
present); Chairman of the Board (2005 to present) and Director (1999
to present), Starwood Hotels & Resorts, a hotel and leisure company
Robert J. Gerrard, Jr.
(1952)
2012
[181]
Chairman of Compensation Committee and Director, Syniverse
Holdings, Inc., a provider of wireless voice and data services for
telecommunications companies (2008 to 2011); Advisory Board
Member, Pipeline Crisis/Winning Strategies, a collaborative working
to improve opportunities for young African Americans (1997
to present)
Paul F. McBride
(1956)
2013
[181]
Former Company Officer and Senior Vice President, Human
Resources and Corporate Initiatives, Black & Decker Corporation
(2004 to 2010)
*Each independent director serves until retirement, resignation, or election of a successor.
49
Independent Directors (continued)
Name
(Year of Birth)
Year Elected*
Cecilia E. Rouse, Ph.D.
(1963)
2012
[181]
Dean, Woodrow Wilson School (2012 to present); Professor and
Researcher, Princeton University (1992 to present); Director, MDRC, a
nonprofit education and social policy research organization (2011 to
present); Member, National Academy of Education (2010 to present);
Research Associate, National Bureau of Economic Research’s Labor
Studies Program (2011 to present); Member, President’s Council of
Economic Advisers (2009 to 2011); Chair of Committee on the Status
of Minority Groups in the Economic Profession, American Economic
Association (2012 to present)
John G. Schreiber
(1946)
2001
[181]
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 2013); Director, Blackstone
Mortgage Trust, a real estate financial company (2012 to present);
Director and Chairman of the Board, Brixmor Property Group, Inc.
(2013 to present); Director, Hilton Worldwide (2013 to present);
Director, Hudson Pacific Properties (2014 to present)
Mark R. Tercek
(1957)
2009
[181]
President and Chief Executive Officer, The Nature Conservancy (2008
to present)
*Each independent director serves until retirement, resignation, or election of a successor.
50
Inside Directors
Name
(Year of Birth)
Year Elected*
Edward C. Bernard
(1956)
2006
[181]
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., and T. Rowe Price
Services, Inc.; Chairman of the Board, Chief Executive Officer,
Director, and President, T. Rowe Price International and T. Rowe Price
Trust Company; Chairman of the Board, all funds
Brian C. Rogers, CFA, CIC
(1955)
2006
[127]
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 Value Fund
Principal Occupation(s)
Darrell N. Braman (1963)
Vice President
Vice President, Price Hong Kong, Price
Singapore, T. Rowe Price, T. Rowe Price Group,
Inc., T. Rowe Price International, T. Rowe Price
Investment Services, Inc., and T. Rowe Price
Services, Inc.
Ryan N. Burgess, CFA (1974)
Vice President
Vice President, T. Rowe Price and T. Rowe Price
Group, Inc.
Christopher W. Carlson (1967)
Vice President
Group, Inc.
Ira W. Carnahan, CFA (1963)
Vice President
Group, Inc.
Henry M. Ellenbogen (1973)
Vice President
Vice President, T. Rowe Price, T. Rowe Price
Group, Inc., and T. Rowe Price Trust Company
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price
International for at least 5 years.
51
Officers (continued)
Name (Year of Birth)
Mark S. Finn, CFA, CPA (1963)
Vice President
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.
Ryan S. Hedrick, CFA (1980)
Vice President
Vice President, T. Rowe Price and T. Rowe
Price Group Inc.; formerly, Analyst, Davidson
Kempner Capital Management (to 2013)
Dominic Janssens (1965)
Vice President
Paul J. Krug, CPA (1964)
Vice President
Patricia B. Lippert (1953)
Secretary
Assistant Vice President, T. Rowe Price and
T. Rowe Price Investment Services, Inc.
Catherine D. Mathews (1963)
Treasurer and Vice President
Gregory A. McCrickard, CFA (1958)
Vice President
Heather K. McPherson, CPA (1967)
Executive 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;
Chief Legal Officer, Vice President, and
Secretary, T. Rowe Price Group, Inc.; Vice
President and Secretary, T. Rowe Price and
T. Rowe Price International; Vice President, Price
Hong Kong and Price Singapore
John W. Ratzesberger (1975)
Vice President
Group, Inc., and T. Rowe Price Trust Company;
formerly, North American Head of Listed
Derivatives Operation, Morgan Stanley
(to 2013)
International for at least 5 years.
52
Officers (continued)
Name (Year of Birth)
Deborah D. Seidel (1962)
Vice President
Group, Inc., T. Rowe Price Investment Services,
Inc., and T. Rowe Price Services, Inc.
J. David Wagner, CFA (1974)
Vice President
David J. Wallack (1960)
President
Justin P. White (1981)
Vice President
Group, Inc.
John M. Williams (1982)
Vice President
Group, Inc.
Jeffrey T. Zoller (1970)
Vice President
International, and T. Rowe Price Trust Company
International for at least 5 years.
53
T. Rowe Price Mutual Funds
This page contains supplementary information that is not part of the shareholder report.
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
Tax-Efficient Equity
Total Equity Market Index
U.S. Large-Cap Core
Value
Domestic Taxable
Corporate Income
Credit Opportunities
Floating Rate
GNMA
High Yield‡
Inflation Protected Bond
Limited Duration Inflation
Focused Bond
New Income
Short-Term Bond
Ultra Short-Term Bond
U.S. Bond Enhanced Index
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Georgia Tax-Free Bond
Intermediate Tax-Free High Yield
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
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
Global Allocation
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Real Assets
Spectrum Growth
Spectrum Income
Spectrum International
Target Date Fundsˆ
MONEY MARKET FUNDS
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
INTERNATIONAL/GLOBAL
FUNDS
Stock
Africa & Middle East
Asia Opportunities
Emerging Europe
Emerging Markets Stock
Emerging Markets Value Stock
European Stock
Global Growth Stock
Global Industrials
Global Real Estate
Global Stock
Global Technology
International Concentrated Equity
International Discovery
International Equity Index
International Growth & Income
International Stock
Japan
Latin America
New Asia
Overseas Stock
Bond
Emerging Markets Bond
Emerging Markets Corporate Bond
Emerging Markets Local
Currency Bond
Global High Income Bond
Global Multi-Sector Bond
Global Unconstrained Bond
International Bond
Call 1-800-225-5132 to 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.
Closed to new investors except for a direct rollover from a retirement plan into a T. Rowe Price IRA
invested in this fund.
ˆThe Target Date Funds are inclusive of the Retirement Funds, the Target Retirement Funds, and the
Retirement Balanced Fund.
‡
2016-US_18994
T. Rowe Price Investment Services, Inc. 100 East Pratt Street
Baltimore, MD 21202
F115-050 2/16

TRMCX TAMVX RRMVX TRMIX Mid-Cap Value

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