Fellow Shareholders
Rising interest rates and fears of increased inflation contributed to malaise
and uncertainty in the equity markets during the second quarter. While
larger-capitalization stocks managed to break even, smaller stocks did
substantially worse. In this environment, the Small-Cap Value Fund fell
slightly, but once again bettered the unmanaged small-company Russell 2000 and
Nasdaq indices, as shown below.
Performance Comparison
Periods Ended 6/30/94
3 Months 6 Months
_____________________
Small-Cap Value Fund -1.4% -2.0%
S&P 500 0.4 -3.4
Russell 2000 Index -3.9 -6.4
Nasdaq Composite* -5.0 -9.1
*Principal only
Market Review
As the table above reveals, small-capitalization and over-the-counter
stocks have not fared well so far this year. In studying the results, we find
that higher volatility growth stocks have been among the worst performers,
while so-called value stocks have declined relatively little. This dichotomy
is not unusual and, as we have pointed out in the past, is one reason we
consider value investing a good, long-term, "all-weather" strategy.
The flip side of the coin is that growth stocks tend to rise sharply in
good markets, often making up in a relatively short period the ground
previously lost. For example, the Nasdaq Composite Index-heavily influenced by
growth stocks-will undoubtedly show good results in the future when the stock
market recovers. In the meantime, our conservative value strategy should
continue to provide lower volatility for investors in the small-cap sector.
Portfolio Review
In last quarter's report, we discussed the concept of low turnover, i.e., the
relatively infrequent buying and selling of stocks in the portfolio. We pursue
a strategy of low turnover to minimize transaction costs and to postpone the
capital gains taxes our shareholders have to pay on realized gains. In the
second quarter, turnover remained at an annualized rate of 11%, a figure well
below that of the average stock mutual fund.
Notwithstanding our desire to hold turnover down, we do not ignore
attractive opportunities to buy or sell stocks. During the quarter, we sold at
a profit our entire position in Wheatley TXT because the company was the
object of a takeover bid. We sold part of our large position in La Quinta Inns
because the stock no longer appeared to be a good value after its sharp rise
over the previous nine months. And, we sold shares of Cubic and Sands Regent
after determining that their earnings prospects were less favorable than
expected.
Two of our new purchases merit mention. The largest addition during the
quarter was International Gold Resources (IGR), a small Canadian-based gold
mining company. IGR owns gold exploration rights in West Africa that appear
quite promising. The "hidden" value in the stock is literally underground. The
catalyst for our realizing the stock's value is whether the company's drilling
program uncovers those gold reserves. Because the company is small and not
well known, its stock was trading well below the valuation of larger gold
mining firms with similar prospects. We believe the stock will do well if the
drilling program under way confirms extensive gold reserves.
Another large purchase was Sudbury, a multi-division industrial company
based in Ohio. A new management team brought the company out of bankruptcy in
1991 and began a long process toward restoring the firm's financial health. We
are usually skeptical of "turnaround" stories, but we believe Sudbury's
management has sufficient business experience and financial incentives to make
this turnaround succeed. The stock is truly undervalued, thanks to a lack of
Wall Street sponsorship to date. We are unconcerned, because investors will
sooner or later wake up to the progress Sudbury has made, causing higher
valuations for the stock.
Outlook
The last six months remind us that the stock market periodically gives back
some of the gains previously won. Nevertheless, in historical terms, this
year's correction has been unusually mild. It would not be surprising if we
saw further weakness in stock prices this summer, particularly if the Federal
Reserve pushes interest rates even higher.
Having said this, we spend no time trying to guess interest rate
movements or the next change in the stock market's level. We spend our time
visiting small companies and trying to understand why industries and companies
fall into and out of favor among investors. We manage your money
conservatively in an otherwise volatile sector of the market. And, we stick to
the Fund's charter of investing in companies we consider undervalued, yet
where change is occurring and likely to be recognized at some point by the
market.
Respectfully submitted,
Preston G. Athey
President
July 20, 1994
Twenty-Five Largest Holdings
June 30, 1994
Percent of
Net Assets
__________
La Quinta Inns 3.1%
Grey Advertising 2.2
CSS Industries 1.8
Electro Rent 1.8
Seattle Filmworks 1.6
Owens & Minor 1.5
McGrath RentCorp 1.5
Keane 1.4
Unitog 1.4
DH Technology 1.3
Builders Transport 1.3
Plenum Publishing 1.2
Safeguard Health 1.2
Commercial Federal 1.2
United Insurance 1.1
National Health Investors 1.1
Intertrans 1.1
Rival 1.0
Aceto 1.0
First Financial Fund 1.0
Mutual Assurance 1.0
Allied Capital Commercial 1.0
Puerto Rican Cement 1.0
Donnkenny 0.9
Allied Capital II 0.9
Total 33.6%
Major Portfolio Changes
Three Months Ended June 30, 1994
TEN LARGEST PURCHASES
Cost (000)
International Gold Resources* $1,878
American White Cross* 1,650
Sudbury 1,520
Handex Environmental Recovery 582
Oil-Dri 510
Re Capital 498
Convest Energy 454
Hancock Fabric 429
Landauer 418
Mine Safety Appliances 415
TEN LARGEST SALES
Proceeds (000)
La Quinta Inns $2,275
Wheatley TXT** 1,463
Cubic 1,047
Sands Regent 805
Johnson Worldwide** 679
Mark VII 672
Clear Channel Communications** 573
Pittencrieff Communications 555
M/A/R/C 510
Penn Virginia 480
* Position added
** Position eliminated
Portfolio of Investments (Value in thousands)
T. Rowe Price Small-Cap Value Fund / June 30, 1994 (Unaudited)
Common Stocks & Warrants - 91.8%
FINANCIAL - 14.7%
Value
___________
BANK & TRUST - 3.7%
221,000 shs. * Commercial Federal . . . . . . . . . . $ 5,194
1,386 * First National Bank of
Anchorage. . . . . . . . . . . . . . . 2,252
96,500 Glacier Bancorp. . . . . . . . . . . . 1,785
450,000 * Guardian Bancorp . . . . . . . . . . . 703
450,000 wts. * Guardian Bancorp, 1/1/99 . . . . . . . 5
80,000 shs. Hawkeye Bancorp. . . . . . . . . . . . 1,680
77,250 Redwood Empire Bancorp . . . . . . . . 1,043
360,500 * Silicon Valley Bancshares. . . . . . . 3,785
16,447
INSURANCE - 6.3%
175,000 Intercargo . . . . . . . . . . . . . . 1,838
55,000 * Markel . . . . . . . . . . . . . . . . 2,186
200,000 * Milwaukee Insurance Group. . . . . . . 2,200
220,500 * Mutual Assurance . . . . . . . . . . . 4,520
113,300 * Navigators Group . . . . . . . . . . . 1,940
168,500 Poe & Associates . . . . . . . . . . . 3,412
430,000 Presidential Life. . . . . . . . . . . 2,956
70,000 # Presidential Life. . . . . . . . . . . 481
229,400 Re Capital . . . . . . . . . . . . . . 2,896
190,000 * United Insurance . . . . . . . . . . . 5,000
27,429
FINANCIAL SERVICES - 4.7%
124,000 Aames Financial. . . . . . . . . . . . 1,054
72,500 Allied Capital . . . . . . . . . . . . 1,015
251,248 Allied Capital Commercial. . . . . . . 4,240
267,500 Allied Capital II. . . . . . . . . . . 3,812
125,000 Allied Capital Lending . . . . . . . . 1,750
162,500 BHC Financial. . . . . . . . . . . . . 1,645
250,000 Foothill Group . . . . . . . . . . . . 2,938
140,000 Piper, Jaffray . . . . . . . . . . . . 1,750
88,200 Quick & Reilly . . . . . . . . . . . . 2,238
20,442
Total Financial 64,318
CONSUMER NONDURABLES - 13.8%
BEVERAGES - 0.3%
198,413 *# Chalone Wine Group . . . . . . . . . . 952
142,857 wts. *# Chalone Wine Group, 7/19/98. . . . . . 172
1,124
FOOD PROCESSING - 1.3%
95,000 shs. * Smithfield Foods . . . . . . . . . . . $ 2,666
135,000 Thorn Apple Valley . . . . . . . . . . 3,138
5,804
HOSPITAL SUPPLIES/HOSPITAL
MANAGEMENT - 5.5%
48,500 E-Z-EM (Class A) . . . . . . . . . . . 243
41,860 E-Z-EM (Class B) . . . . . . . . . . . 209
250,000 Landauer . . . . . . . . . . . . . . . 3,437
240,000 * Lunar. . . . . . . . . . . . . . . . . 3,180
176,000 National Health Investors. . . . . . . 4,796
450,000 Owens & Minor. . . . . . . . . . . . . 6,694
400,000 *! Safeguard Health . . . . . . . . . . . 5,200
120,000 * Staff Builders . . . . . . . . . . . . 390
24,149
MISCELLANEOUS CONSUMER PRODUCTS - 6.7%
275,000 * American White Cross . . . . . . . . . 1,478
160,000 Boston Acoustics . . . . . . . . . . . 2,280
198,750 Culp . . . . . . . . . . . . . . . . . 1,838
170,000 * Donnkenny. . . . . . . . . . . . . . . 4,101
350,000 * ERO. . . . . . . . . . . . . . . . . . 3,456
100,000 Fab Industries . . . . . . . . . . . . 3,400
82,800 General Housewares . . . . . . . . . . 942
300,000 * Horace Small Apparel . . . . . . . . . 1,575
100,000 * Mace Security International. . . . . . 363
219,253 ! Rauch Industries . . . . . . . . . . . 1,946
223,200 Rival. . . . . . . . . . . . . . . . . 4,576
240,000 Superior Surgical Mfg. . . . . . . . . 3,000
28,955
Total Consumer Nondurables 60,032
CONSUMER SERVICES - 16.3%
SPECIALTY MERCHANDISERS - 4.9%
500,000 * CSS Industries . . . . . . . . . . . . 8,063
112,600 Frederick's of Hollywood
(Class A). . . . . . . . . . . . . . 464
250,000 Frederick's of Hollywood
(Class B). . . . . . . . . . . . . . 1,063
203,280 ! Genovese Drug Stores . . . . . . . . . 2,312
400,000 Hancock Fabrics. . . . . . . . . . . . 3,150
80,905 Haverty Furniture. . . . . . . . . . . 971
100,000 * InaCom . . . . . . . . . . . . . . . . 813
340,000 *! S & K Famous Brands. . . . . . . . . . 3,570
182,000 * Vans . . . . . . . . . . . . . . . . . 887
21,293
ENTERTAINMENT & LEISURE - 6.2%
50,000 shs. Bowl America . . . . . . . . . . . . . $ 950
150,000 * Carmike Cinemas (Class A). . . . . . . 2,737
145,750 * Consolidated Products. . . . . . . . . 1,494
510,000 La Quinta Inns . . . . . . . . . . . . 13,324
15,000 Sands Regent . . . . . . . . . . . . . 184
470,000 *! Seattle Filmworks. . . . . . . . . . . 7,050
125,000 * Uno Restaurant . . . . . . . . . . . . 1,297
27,036
MEDIA & COMMUNICATIONS - 5.2%
130,000 ! Courier. . . . . . . . . . . . . . . . 1,885
51,865 Grey Advertising . . . . . . . . . . . 9,446
500,000 * MDC Corp.. . . . . . . . . . . . . . . 995
140,000 wts. * MDC Corp. (144a), 1/24/95. . . . . . . 251
200,000 shs. Plenum Publishing. . . . . . . . . . . 5,350
100,000 Pulitzer Publishing. . . . . . . . . . 3,537
100,000 * Saga Communications. . . . . . . . . . 1,212
22,676
Total Consumer Services 71,005
CONSUMER CYCLICALS - 5.0%
AUTOMOBILES & RELATED - 1.3%
65,000 Myers Industries . . . . . . . . . . . 1,308
200,000 *! Republic Automotive Parts. . . . . . . 3,250
100,000 * TBC. . . . . . . . . . . . . . . . . . 1,150
5,708
BUILDING & REAL ESTATE - 2.2%
250,000 Bradley Real Estate. . . . . . . . . . 2,125
305,000 ! Homeowners Group . . . . . . . . . . . 572
74,000 Liberty Homes. . . . . . . . . . . . . 735
146,156 Puerto Rican Cement. . . . . . . . . . 4,184
80,000 Sun Communities. . . . . . . . . . . . 1,870
9,486
MISCELLANEOUS CONSUMER DURABLES - 1.5%
50,000 * Chromcraft Revington . . . . . . . . . 963
52,000 Juno Lighting. . . . . . . . . . . . . 988
100,000 Pulaski Furniture. . . . . . . . . . . 2,037
135,300 * Stanley Furniture. . . . . . . . . . . 1,691
120,000 * Winston Furniture. . . . . . . . . . . 1,080
6,759
Total Consumer Cyclicals 21,953
TECHNOLOGY - 6.0%
ELECTRONIC COMPONENTS - 0.3%
58,700 ! Badger Meter . . . . . . . . . . . . . 1,313
ELECTRONIC SYSTEMS - 0.8%
87,900 * CEM Corp . . . . . . . . . . . . . . . 1,011
37,800 Cubic Corp . . . . . . . . . . . . . . 709
175,000 shs. Instron. . . . . . . . . . . . . . . . 1,706
3,426
INFORMATION PROCESSING - 1.8%
200,000 *! CMG Information Services . . . . . . . 1,800
290,000 *! DH Technology. . . . . . . . . . . . . 5,872
7,672
SPECIALIZED COMPUTER - 0.3%
225,000 * PDA Engineering. . . . . . . . . . . . 1,238
TELECOMMUNICATIONS - 0.0%
15,000 * Pittencrieff Communications. . . . . . 199
AEROSPACE & DEFENSE - 2.8%
275,000 *! COMARCO. . . . . . . . . . . . . . . . 1,409
150,000 * Nichols Research . . . . . . . . . . . 1,481
175,000 Raven Industries . . . . . . . . . . . 3,347
150,000 * Tech-Sym . . . . . . . . . . . . . . . 3,075
35,000 * Woodward Governor. . . . . . . . . . . 2,949
12,261
Total Technology 26,109
CAPITAL EQUIPMENT - 2.3%
MACHINERY - 2.3%
150,000 Alamo Group. . . . . . . . . . . . . . 2,475
268,000 Farrel . . . . . . . . . . . . . . . . 1,809
200,000 *! K-Tron . . . . . . . . . . . . . . . . 2,300
45,000 * Lindsay Manufacturing. . . . . . . . . 1,319
225,000 Sudbury. . . . . . . . . . . . . . . . 1,462
61,900 Versa Technologies . . . . . . . . . . 766
10,131
Total Capital Equipment 10,131
BUSINESS SERVICES & TRANSPORTATION - 18.1%
COMPUTER SERVICE & SOFTWARE - 3.7%
180,000 Analysts International . . . . . . . . 2,970
180,000 * GBC Technologies . . . . . . . . . . . 1,800
180,000 * Keane. . . . . . . . . . . . . . . . . 6,232
200,000 * State of the Art . . . . . . . . . . . 1,250
138,800 ! Technalysis. . . . . . . . . . . . . . 1,544
150,000 *! Xylogics . . . . . . . . . . . . . . . 2,588
16,384
DISTRIBUTION SERVICES - 0.4%
170,000 VWR. . . . . . . . . . . . . . . . . . 1,700
ENVIRONMENTAL - 2.7%
285,000 BHA Group. . . . . . . . . . . . . . . 2,636
400,000 * EMCON. . . . . . . . . . . . . . . . . 3,025
100,000 * Groundwater Technology . . . . . . . . 1,350
248,900 * Handex Environmental
Recovery . . . . . . . . . . . . . . 1,836
102,006 Heidemij N.V . . . . . . . . . . . . . 995
200,000 shs. * TRC. . . . . . . . . . . . . . . . . . 2,000
11,842
TRANSPORTATION SERVICES - 2.7%
250,000 * Builders Transport . . . . . . . . . . 3,406
361,500 Intertrans . . . . . . . . . . . . . . 4,699
200,000 * KLLM Transport . . . . . . . . . . . . 3,200
25,000 * Mark VII . . . . . . . . . . . . . . . 341
11,646
MISCELLANEOUS BUSINESS SERVICES - 8.6%
500,000 Amresco. . . . . . . . . . . . . . . . 3,750
67,000 * C. H. Heist. . . . . . . . . . . . . . 385
574,500 *! Electro Rent . . . . . . . . . . . . . 7,971
100,000 * Insituform Technologies. . . . . . . . 1,325
140,000 ! L.E. Myers . . . . . . . . . . . . . . 1,470
27,359 * M/A/R/C. . . . . . . . . . . . . . . . 246
380,000 McGrath RentCorp . . . . . . . . . . . 6,460
90,000 Mine Safety Appliances . . . . . . . . 3,578
173,000 *! Right Management
Consultants. . . . . . . . . . . . . 2,984
260,000 ! Tab Products . . . . . . . . . . . . . 2,535
75,100 * TETRA Technologies . . . . . . . . . . 648
220,000 Unitog . . . . . . . . . . . . . . . . 6,105
37,457
Total Business Services & Transportation 79,029
ENERGY - 5.8%
ENERGY SERVICES - 3.7%
85,000 * BJ Services. . . . . . . . . . . . . . 1,753
100,000 * Enterra. . . . . . . . . . . . . . . . 2,100
350,000 ICO. . . . . . . . . . . . . . . . . . 2,013
80,400 Moorco International . . . . . . . . . 1,276
200,000 * Newpark Resources. . . . . . . . . . . 3,200
200,000 * Offshore Logistics . . . . . . . . . . 2,725
64,600 Pitt-DesMoines . . . . . . . . . . . . 1,744
106,400 * Sundowner Offshore
Services . . . . . . . . . . . . . . 1,490
16,301
EXPLORATION & PRODUCTION - 1.6%
125,000 * American Oil & Gas . . . . . . . . . . 1,266
175,000 * Convest Energy . . . . . . . . . . . . 1,181
130,800 Devon Energy . . . . . . . . . . . . . 2,943
80,000 * HS Resources . . . . . . . . . . . . . 1,730
7,120
GAS TRANSMISSION - 0.5%
110,000 ! AlaTenn Resources. . . . . . . . . . . 2,062
Total Energy . . . . . . . . . . . . . . . . . . . 25,483
PROCESS INDUSTRIES - 2.7%
DIVERSIFIED CHEMICALS - 1.5%
300,000 shs. ! Aceto. . . . . . . . . . . . . . . . . $ 4,575
108,600 LeaRonal . . . . . . . . . . . . . . . 1,846
6,421
SPECIALTY CHEMICALS - 1.2%
175,000 * Specialty Chemical
Resources. . . . . . . . . . . . . . 700
108,800 * Sybron Chemical. . . . . . . . . . . . 2,611
125,000 Synalloy . . . . . . . . . . . . . . . 2,188
5,499
Total Process Industries 11,920
BASIC MATERIALS - 4.8%
METALS - 1.7%
301,000 * Lone Star Technologies . . . . . . . . 2,182
130,000 * Material Sciences. . . . . . . . . . . 2,892
150,000 Steel Technologies . . . . . . . . . . 2,513
7,587
MINING - 1.6%
550,000 * Dayton Mining. . . . . . . . . . . . . 1,632
745,000 *!# International Gold Resources . . . . . 2,134
372,500 wts. *!# International Gold
Resources, 4/7/95. . . . . . . . . . 86
60,000 shs. Pegasus Gold . . . . . . . . . . . . . 960
337,000 *# TVX Gold . . . . . . . . . . . . . . . 1,980
6,792
MISCELLANEOUS MATERIALS - 1.5%
165,600 Oil-Dri. . . . . . . . . . . . . . . . 3,291
100,000 Penn Virginia. . . . . . . . . . . . . 3,300
6,591
Total Basic Materials 20,970
INVESTMENT COMPANIES - 1.1%
320,963 First Financial Fund . . . . . . . . . 4,574
Total Investment Companies 4,574
Miscellaneous - 1.2% 4,947
Total Common Stocks & Warrants
(Cost - $333,641) 400,471
Convertible Preferred Stocks - 1.1%
80,000 ICO, $1.6875 . . . . . . . . . . . . . 1,600
41,000 Pacific Crest Capital,
Series A . . . . . . . . . . . . . . 963
183,500 Redwood Empire Bancorp,
7.875%, Series A . . . . . . . . . . 2,248
Total Convertible Preferred Stocks (Cost - $4,860) 4,811
T. Rowe Price Small-Cap Value Fund / Portfolio of Investments
Convertible Bonds - 1.7%
$ 1,365,000 Builders Transport,
Sub. Deb., 6.50%, 5/1/11 . . . . . . $ 1,044
1,500,000 Builders Transport,
Sub. Deb., 8.00%, 8/15/05. . . . . . 1,365
277,000 COMARCO, Sub. Deb.,
9.75%, 4/15/00 . . . . . . . . . . . 263
376,000 Consolidated Products, Sub.
Deb., 10.00%, 11/30/02 . . . . . . . 1,184
3,000,000 First Republic Bancorp, Sub.
Deb., 7.25%, 12/1/02 . . . . . . . . 3,458
Total Convertible Bonds (Cost - $5,684) 7,314
Corporate Bonds - 0.3%
1,000,000 Dayton Mining Corporation,
7.00%, 1/31/99 . . . . . . . . . . . 1,420
Total Corporate Bonds (Cost - $1,000) 1,420
Short-Term Investments - 5.2%
COMMERCIAL PAPER - 3.1%
5,000,000 Asset Securitization
Cooperative, 4(2),
4.38%, 7/7/94. . . . . . . . . . . . 4,970
3,780,000 Harvard University,
4.30%, 7/1/94. . . . . . . . . . . . 3,779
5,000,000 Western Australian Treasury,
4.50%, 7/13/94 . . . . . . . . . . . 4,962
13,711
MEDIUM-TERM NOTES - 2.1%
5,000,000 Bear Stearns, VR,
4.56%, 12/13/94. . . . . . . . . . . 5,000
2,000,000 Citicorp, VR, 4.675%, 12/7/94. . . . . 1,999
2,000,000 Morgan Stanley Group, VR,
4.713%, 7/13/95. . . . . . . . . . . 2,002
9,001
Total Short-Term Investments (Cost - $22,712) 22,712
Total Investments in Securities - 100.1%
of Net Assets (Cost - $367,897) $ 436,728
* Non-income producing
! Affiliated company
# Security contains some restrictions as to public resale - total of
such securities at period-end amounts to 1.4% of net assets.
VR Variable Rate
4(2) Commercial Paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of
1933, as amended, and may be sold only to dealers in that program or
other "accredited investors".
144a Security was purchased pursuant to Rule 144a under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers - total of such securities at period end amounts
to 0.1% of net assets.
The accompanying notes are an integral part of these financial statements.
Statement of Assets and Liabilities
T. Rowe Price Small-Cap Value Fund / June 30, 1994 (Unaudited)
Amounts in Thousands
_______________________
ASSETS
Investments in securities at value
Affiliated companies (Cost - $50,295). . . . . . $ 66,344
Other companies (Cost - $317,602). . . . . . . . 370,384
Total investments in securities. . . . . . . . . $ 436,728
Other assets . . . . . . . . . . . . . . . . . . . 1,503
_________
Total assets . . . . . . . . . . . . . . . . . . . 438,231
LIABILITIES
Payable for investment securities
purchased. . . . . . . . . . . . . . . . . . . . 564
Other liabilities. . . . . . . . . . . . . . . . . 1,188
_________
Total liabilities. . . . . . . . . . . . . . . . . 1,752
_________
Net Assets Consisting of:
Accumulated net investment income
- net of distributions . . . . . . . . . . . . . 2,386
Accumulated realized gains/losses
- net of distributions . . . . . . . . . . . . . 16,212
Net unrealized appreciation of investments . . . . 68,831
Paid-in-capital applicable to 30,352,339
shares of $0.01 par value capital
stock outstanding; 1,000,000,000
shares authorized. . . . . . . . . . . . . . . . 349,050
_________
NET ASSETS $ 436,479
_________
_________
NET ASSET VALUE PER SHARE $14.38
______
______
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price Small-Cap Value Fund / Six Months Ended June 30, 1994
(Unaudited)
Amounts in Thousands
______________________
INVESTMENT INCOME
Income
Dividends (including $208,000 from
affiliated issues) . . . . . . . . . . . . . . . . $ 3,640
Interest . . . . . . . . . . . . . . . . . . . . . . 819
_________
Total income . . . . . . . . . . . . . . . . . . . . $ 4,459
Expenses
Investment management fees . . . . . . . . . . . . . 1,555
Shareholder servicing fees & expenses. . . . . . . . 452
Custodian and accounting fees & expenses . . . . . . 72
Prospectus & shareholder reports . . . . . . . . . . 48
Registration fees & expenses . . . . . . . . . . . . 36
Legal & auditing fees. . . . . . . . . . . . . . . . 14
Directors' fees & expenses . . . . . . . . . . . . . 8
Proxy & annual meeting . . . . . . . . . . . . . . . 7
Miscellaneous expenses . . . . . . . . . . . . . . . 7
_________
Total expenses . . . . . . . . . . . . . . . . . . . 2,199
_________
Net investment income. . . . . . . . . . . . . . . . . 2,260
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain. . . . . . . . . . . . . . . . . . . 12,553
Change in net unrealized appreciation
or depreciation. . . . . . . . . . . . . . . . . . . (24,232)
_________
Net loss on investments. . . . . . . . . . . . . . . . (11,679)
_________
DECREASE IN NET ASSETS FROM OPERATIONS $ (9,419)
_________
_________
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Small-Cap Value Fund (Unaudited)
Six Months Ended Year Ended
June 30, 1994 December 31, 1993
_________________ __________________
Amounts in Thousands
____________________________________
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income. . . . . . . . . $ 2,260 $ 3,647
Net realized gain on
investments. . . . . . . . . . . . . 12,553 14,148
Change in net unrealized
appreciation or depreciation
of investments . . . . . . . . . . . (24,232) 63,340
__________ __________
Increase (decrease) in net
assets from operations . . . . . . . (9,419) 81,135
__________ __________
Distributions to shareholders
Net investment income. . . . . . . . . -- (2,991)
Net realized gain on investments . . . -- (10,470)
__________ __________
Decrease in net assets from
distributions to shareholders. . . . -- (13,461)
__________ __________
Capital share transactions
Sold 4,151 and 17,918 shares . . . . . 61,297 236,014
Distributions reinvested of
0 and 891 shares . . . . . . . . . . -- 12,756
Redeemed 4,602 and
9,504 shares . . . . . . . . . . . . (67,515) (128,349)
__________ __________
Increase (decrease) in net
assets from capital share
transactions . . . . . . . . . . . . (6,218) 120,421
__________ __________
Total increase (decrease). . . . . . . . (15,637) 188,095
NET ASSETS
Beginning of period. . . . . . . . . . 452,116 264,021
__________ __________
End of period. . . . . . . . . . . . . $ 436,479 $ 452,116
__________ __________
__________ __________
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price Small-Cap Value Fund / June 30, 1994 (Unaudited)
Note 1 - Significant Accounting Policies
T. Rowe Small-Cap Value Fund (the Fund) is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
A) Valuation - Equity securities listed or regularly traded on a securities
exchange (including Nasdaq) are valued at the last quoted sales price on the
day the valuations are made. A security which is listed or traded on more than
one exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price
within the limits of the latest bid and asked prices deemed by the Board of
Directors, or by persons delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and
are valued at a price deemed best to reflect fair value as quoted by dealers
who make markets in these securities
Notes to Financial Statements (Cont'd)
or by an independent pricing service. Short-term debt securities are valued at
their cost which, when combined with accrued interest, approximates fair
value.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by, or under the supervision of, the officers of
the Fund, as authorized by the Board of Directors.
B) Affiliated Companies - Investments in companies 5% or more of whose
outstanding voting securities are held by the Fund are defined as "Affiliated
Companies" in Section 2(a)(3) of the Investment Company Act of 1940.
C) 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 an identified cost basis. Dividend income and distributions to
shareholders are recorded by the Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income
tax regulations which may differ from generally accepted accounting
principles.
Note 2 - Portfolio Transactions
Purchases and sales of portfolio securities, other than short-term and U.S.
Government securities, aggregated $41,609,000 and $37,416,000 respectively,
for the six months ended June 30, 1994.
Note 3 - Federal Income Taxes
No provision for federal income taxes is required since the Fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income.
At June 30, 1994, the aggregate cost of investments for federal income
tax and financial reporting purposes was $367,897,000 and net unrealized
appreciation aggregated $68,831,000, of which $92,190,000 related to
appreciated investments and $23,359,000 to depreciated investments.
Note 4 - Related Party Transactions
The investment management agreement between the Fund and T. Rowe Price
Associates, Inc. (the Manager) provides for an annual investment management
fee, computed daily and paid monthly, consisting of an Individual Fund Fee
equal to 0.35% of average daily net assets and a Group Fee. The Group Fee is
based on the combined assets of certain mutual funds sponsored by the Manager
or Rowe Price-Fleming International, Inc. (the Group). The Group Fee rate
ranges from 0.48% for the first $1 billion of assets to 0.31% for assets in
excess of $34 billion. The effective annual Group Fee rate at June 30, 1994
and for the six months then ended was 0.34%. The Fund pays a pro rata portion
of the Group Fee based on the ratio of the Fund's net assets to those of the
Group.
T. Rowe Price Services, Inc. (TRPS) and Retirement Plan Services, Inc.
(RPS) are wholly owned subsidiaries of the Manager. TRPS provides transfer and
dividend disbursing agent functions and shareholder services for all accounts.
RPS provides subaccounting and recordkeeping services for certain retirement
accounts invested in the Fund. The Manager, under a separate agreement,
calculates the daily share price and maintains the financial records of the
Fund. For the six months ended June 30, 1994 the Fund incurred fees totalling
approximately $407,000 for these services provided by related parties. At June
30, 1994, these investment management and service fees payable were $340,000.
<TABLE>
Financial Highlights
T. Rowe Price Small-Cap Value Fund (Unaudited)
<CAPTION>
For a share outstanding through each period
____________________________________________________________
Six
Months
Ended Year Ended December 31,
June 30, __________________________________________________
1994 1993 1992 1991 1990 1989
____________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD . . . . . . . . . . . . $14.68 $12.28 $10.37 $8.09 $9.53 $8.98
________ ________ ________ ________ ________ ________
Investment Activities
Net investment income . . . . . . . . . . . 0.08 0.12 0.11 0.13* 0.23* 0.14*
Net realized and unrealized
gain (loss) . . . . . . . . . . . . . . . (0.38) 2.73 2.05 2.61 (1.31) 1.45
________ ________ ________ ________ ________ ________
Total from Investment Activities . . . . . . (0.30) 2.85 2.16 2.74 (1.08) 1.59
________ ________ ________ ________ ________ ________
Distributions
Net investment income . . . . . . . . . . . -- (0.10) (0.10) (0.12) (0.24) (0.14)
Net realized gain . . . . . . . . . . . . . -- (0.35) (0.15) (0.34) (0.12) (0.90)
________ ________ ________ ________ ________ ________
Total Distributions. . . . . . . . . . . . . -- (0.45) (0.25) (0.46) (0.36) (1.04)
________ ________ ________ ________ ________ ________
NET ASSET VALUE, END OF PERIOD . . . . . . . $14.38 $14.68 $12.28 $10.37 $8.09 $9.53
________ ________ ________ ________ ________ ________
________ ________ ________ ________ ________ ________
RATIOS/SUPPLEMENTAL DATA
Total Return . . . . . . . . . . . . . . . . (2.0)% 23.3% 20.9% 34.2% (11.3)% 18.1%
Ratio of Expenses to Average
Net Assets. . . . . . . . . . . . . . . . . 0.98%! 1.05% 1.25% 1.25%* 1.25%* 1.25%*!
Ratio of Net Investment Income to
Average Net Assets. . . . . . . . . . . . . 1.00%! 0.91% 0.98% 1.31% 2.57% 1.42%!
Portfolio Turnover Rate. . . . . . . . . . . 17.7%! 11.8% 12.1% 30.5% 33.1% 43.3%!
Net Assets, End of Period
(in thousands). . . . . . . . . . . . . . . $436,479 $452,116 $264,021 $53,228 $26,438 $32,837
<FN>
! Annualized
* Excludes expenses in excess of a 1.25% voluntary expense limitation in effect through December 31, 1993.
</FN>
</TABLE>