Fiscal Year End
|| Mid-Cap Growth
The fund seeks to provide long-term capital growth by investing primarily in the common stocks of mid-cap growth companies.
The fund will normally invest at least 80% of its net assets in a broadly diversified portfolio of common stocks of mid-cap companies. T. Rowe Price expects the earnings of these companies to grow at a faster rate than the average company. The portfolio will be very broadly diversified, and the top 25 holdings will not constitute a large portion of assets. This broad diversification should reduce the effects of individual security price volatility on overall fund performance.
The fund may be an appropriate part of your overall investment strategy if you can accept the greater risk of investing in mid-cap growth companies in an effort to achieve superior capital appreciation. The fund can be used in both regular and tax-deferred accounts, such as IRAs.
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The investment community often overlooks mid-cap companies and their securities may be undervalued, providing the potential for significant capital appreciation. Mid-cap companies are often in the early, more dynamic phase of their life cycles, but are no longer considered new or emerging. Hence, mid-cap companies may offer greater opportunity for capital appreciation than larger, more established companies. Also, the fundís broad diversification may make it less volatile than mid-cap growth funds that have more concentrated portfolios. In addition, portfolio turnover should be relatively low, which may reduce the investorís potential capital gains tax exposure.
The fundís share price can fall because of weakness in the broad market, a particular industry, or specific holdings. Investing in mid-cap companies involves greater risk than is customarily associated with larger companies. In addition, growth stocks can be volatile, especially if they lack the dividends usually associated with value stocks that can cushion their decline in a falling market. Finally, the fundís investment approach could fall out of favor with the investing public, resulting in lagging performance versus other types of stock funds. Diversification cannot assume a profit or protect against loss in a declining market.