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Previous: PRUDENTIAL UNIT TRUSTS INSURED TAX EXEMPT SERIES 39, 497, 1995-02-06 |
Next: ORYX ENERGY CO, 8-K, 1995-02-06 |
<PAGE>
FOR YIELD, PRICE, LAST TRANSACTION,
AND CURRENT BALANCE, 24 HOURS,
7 DAYS A WEEK, CALL:
1-800-638-2587 toll free
625-7676 Baltimore area
FOR ASSISTANCE WITH YOUR EXISTING
FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. ROWE PRICE
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Small-Cap
Value Fund.
[logo]
scv
Annual Report
[logo]
Small-Cap Value
Fund
December 31, 1994
<PAGE>
Fellow Shareholders
During the fourth quarter of 1994, the U.S. equity market suffered through
another period of rising short-term interest rates and investor uncertainty.
Stock prices generally rose in October, fell fairly sharply in November and
early December, then recovered somewhat during the final three weeks. As shown
below, small-company stocks lagged the broader market as represented by the
unmanaged Standard & Poor's 500 Stock Index, for both the quarter and the
year.
Although we were pleased to have weathered the year a bit better than the
small-company stock averages, your Fund failed to keep pace during the second
half, when growth stocks led the small-cap recovery.
Performance Comparison
Periods Ended
12/31/94
3 Months 12 Months
-------------------
Small-Cap Value Fund -3.2% -1.4%
Russell 2000 Index -1.9 -1.8
Nasdaq Composite* -1.6 -3.2
S&P 500 0.0 1.3
- ------------------------------------------------------------------
* Principal only
Our laggards were bank stocks, reacting to higher interest rates; energy
stocks, due to lower natural gas prices; and consumer stocks, which suffered
from weaker-than-expected retail spending. We were underweighted in technology
issues, which rose 20% last year and performed particularly well over the last
six months.
YEAR-END DISTRIBUTIONS
On December 27, 1994, your Board of Directors declared a fourth quarter
dividend of $0.14 per share, a short-term capital gain of $0.07, and a
long-term capital gain of $0.85. All three distributions were paid on December
29 to shareholders of record on December 27. You should already have received
a check or statement reflecting these payouts, as well as your 1099-DIV
reporting them for tax purposes.
PORTFOLIO REVIEW
Because small-company stocks are inherently more risky than large ones, we
seek to limit the impact of individual holdings on the Fund's portfolio by
spreading our investments over 150 stocks. Nevertheless, we have concentrated
nearly one-third of assets in our top 25 holdings, as shown in the table
following this report. We spend correspondingly more time reviewing and
analyzing these large positions and, therefore, would like to update you
periodically on the progress of a few of them.
Our largest holding, California-based ELECTRO RENT, rents and leases
electronic equipment to businesses. Not a glamorous business area, the
equipment rental industry is subject to price cutting and tough competition.
Given these conditions, Electro Rent's management has fashioned a remarkably
consistent, rising profit record over the past decade, with earnings up nearly
40% in the past year alone. Even more important, Chairman Dan Greenberg and
his team follow a shareholder-oriented management style, buying back stock
whenever the price is low, thereby increasing earnings per share. Despite this
outstanding record, Electro Rent's stock sells at a discount price and lacks
recognition on Wall Street.
Mail-order film processor SEATTLE FILMWORKS, our second largest holding,
introduced a number of new products and services in 1994. The most exciting
product, Pictures-on-Disk, digitizes and stores photos on a three and a half
inch computer disk for customers, who can then view and manipulate the
pictures on a personal computer. The company's stock rose 75% last year due to
new products and earnings growth exceeding 25%. Wall Street is just beginning
to discover this intriguing company, and we look forward to further price
appreciation.
<PAGE>
CMG INFORMATION SERVICES, which rose 190% from its initial offering price
in January 1994, wins the award for best 12-month performer. CMG provides
direct marketing support to publishers, financial services, and electronics
companies. We were attracted to the company by its small size, low valuation,
and open-ended growth potential. The company has realized some of that
potential through the development of innovative services and products, such as
software for use on the Internet. While we no longer consider it cheaply
priced, CMG, like Seattle Filmworks, may appreciate more based on increased
attention from Wall Street.
We should also highlight the worst performer among our top holdings,
BUILDERS TRANSPORT (down 31% in 1994). Builders, a South Carolina-based
trucking company, serves a broad range of customers, but focuses most heavily
on hauling building materials. While the stock performed poorly, the company
is doing well, increasing revenues by 18% and earnings by 75% over the past
year. We are pleased with Builders' fundamental progress and patiently await
recognition of the company's improving growth record.
OUTLOOK
Growth and value stocks typically alternate cycles of outperformance lasting
two to three years or more. From January 1992 through mid-1994, small value
stocks led the way. Since the summer, however, small growth stocks, led by
technology issues, have outperformed the value sector. Whether technology and
other high-growth sectors will continue to dominate in 1995 remains to be
seen. If they do, all small-cap stocks should do well, perhaps better than the
broad market averages. Your Fund's share price would likely rise in such an
environment but, with its historically lower volatility, at a more measured
pace than the small-cap universe.
Important Changes in the Fund's Operations
[bullet] FUND REOPENS TO NEW INVESTORS
The Small-Cap Value Fund resumed selling shares to new investors on January
31, 1995. As you are probably aware, the Fund had been closed to new investors
for almost two years. Your Fund's Directors voted to suspend the sale of
shares to new investors on March 4, 1993, because the large inflow of cash at
that time could not be invested without changing the Fund's fundamental
character or potentially penalizing long-term performance.
The Directors recently voted to resume selling shares because market
conditions have changed. Over the past 22 months, we have been able to fully
invest the Fund's cash in a manner consistent with our value-oriented
investment program. We believe that reopening the Fund will benefit all
shareholders. More assets should provide greater flexibility to add attractive
new investments without creating the need to sell promising holdings.
[bullet] REDEMPTION FEE INSTITUTED
Beginning on Monday, April 10, 1995, the Fund will assess a 1% fee on proceeds
resulting from redemptions or exchanges of shares purchased on or after that
date and held less than one year. Any shares you own as of Friday, April 7,
1995, will not be subject to the fee regardless of when they are sold. To
benefit the Fund's shareholders, all proceeds from this redemption fee will be
paid directly to the Fund, not to T. Rowe Price Associates, to help offset the
increased transaction costs associated with short-term trading. A detailed
explanation of the fee was included in a separate letter sent previously to
all shareholders.
The decision to implement the fee reflects the Directors' concern that the
Fund may attract investors who seek to "time" the up and down cycles of the
small-cap market. Such trading activity in the thinly traded small-cap market
can force the Fund to sell underlying securities into a declining market,
which can harm long-term performance. Furthermore, short-term trading activity
increases transaction costs and tax consequences, which are largely borne by
long-term shareholders.
The new redemption fee policy should not affect the vast majority of Fund
shareholders, as they are well aware that the Fund is not designed for
investors who try to time short-term, small-cap market swings.
<PAGE>
Perhaps more than usual, we find it difficult to forecast the general
direction of the stock market in 1995. Excellent corporate earnings growth
coming into this year has offset investor concerns about higher interest
rates. Nevertheless, we do not think small companies are overpriced, nor do we
see excessive speculation in the group.
Our longer-term view is clearer. We believe that small-cap stocks will
perform well in the years ahead, albeit with substantially fluctuating share
prices. We remain intent on managing this portfolio for solid returns with
below-average risk by selecting undervalued, less recognized small companies.
Respectfully submitted,
[signature]
Preston G. Athey
President
January 20, 1995
Fiscal-Year Performance Comparison
[chart]
A line graph compares the 12/31/94 value of a hypothetical $10,000 investment
made in the Small-Cap Value Fund at its inception 6/30/88 and a similar
investment made concurrently in the Russell 2000. At 12/31/94, the Fund
investment would have been worth $19,873, the Index investment would have been
worth $18,589.
Fiscal-Year Performance
Periods ended December 31, 1994
Since Inception
1 Year 5 Years* on 6/30/88*
- ---------------------------------
- -1.38% 11.84% 11.14%
- ---------------------------------
*Average Annual Compound Total Return
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
<PAGE>
Twenty-Five Largest Holdings
December 31, 1994
Percent of
Net Assets
----------
Electro Rent 2.3%
Seattle Filmworks 2.0
Grey Advertising 1.9
CSS Industries 1.9
DH Technology 1.6
McGrath RentCorp 1.6
Owens & Minor 1.5
Unitog 1.5
Mutual Assurance 1.5
La Quinta Inns 1.3
United Insurance 1.3
Silicon Valley Bancshares 1.3
Builders Transport 1.2
Consolidated Products 1.2
Intertrans 1.2
CMG Information Services 1.1
National Health Investors 1.1
Keane 1.1
Hancock Fabrics 1.0
Commercial Federal 1.0
Aceto 1.0
Allied Capital Commercial 1.0
Lunar 1.0
Puerto Rican Cement 1.0
First Financial Fund 1.0
- ---------------------------------------------------------
Total 33.6%
- ---------------------------------------------------------
Major Portfolio Changes
Three Months Ended December 31, 1994
TEN LARGEST PURCHASES
Cost (000)
----------
Daka International
(convertible bonds)* $2,771
VMARK Software* 1,877
Thomas Industries* 1,739
Scotsman Industries* 1,689
Chic by H. I. S.* 1,579
Consolidated Products 1,288
Designs* 1,066
Sudbury 990
Consolidated Products
(convertible bonds) 936
BHC Financial 554
- ---------------------------------------------------------
TEN LARGEST SALES
Proceeds
(000)
----------
Plenum Publishing** $5,100
Xylogics** 4,589
La Quinta Inns 2,823
Industrial Acoustics** 1,740
Pulitzer Publishing** 1,608
Lindsay Manufacturing** 1,342
Keane 1,249
Piper Jaffray 1,196
MacNeal-Schwendler
(convertible bonds) 1,155
ICO 1,103
- ---------------------------------------------------------
- ---------------------------------------------------------
*Position added
**Position eliminated
<PAGE>
Investment Record
T. Rowe Price Small-Cap Value Fund
The table below shows the investment record of one share of the T. Rowe Price
Small-Cap Value Fund, purchased at the initial offering price of $10.00, for
the period 6/30/88 through 12/31/94. Over this time stock prices in general
have risen. The results shown should not be considered a representation of the
dividend income or capital gain or loss which may be realized from an
investment made in the Fund today.
Per- Share Data
<TABLE>
<CAPTION>
With Capital Gains and Income Dividends Annual
Taken in Cash Reinvested in Additional Shares Total Return
--------------------------------- ---------------------------------- On Investment
Periods Net Capital Capital % Change
Ended Asset Gain Income Gain Income Value of -------------
12/31 Value Distributions/2/ Dividends Distributions Dividends Investment Fund S&P500
- ------- ------ ---------------- --------- ------------- --------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1988/2/ $8.98 $0.55 $0.08 $0.55 $0.08 $9.62 -3.8% 3.4%
1989 9.53 0.90 0.14 0.96 0.15 11.36 18.1 31.6
1990 8.09 0.12 0.24 0.14 0.29 10.08 -11.3 -3.1
1991 10.37 0.34 0.12 0.42 0.15 13.52 34.2 30.3
1992 12.28 0.15 0.10 0.20 0.13 16.34 20.9 7.6
1993 14.68 0.35 0.10 0.47 0.13 20.15 23.3 10.1
1994 13.40 0.92 0.14 1.26 0.19 19.87 -1.4 1.3
- ------------------------------------------------------------------------------------------
Total $3.33 $0.92 $4.00 $1.12
- ------------------------------------------------------------------------------------------
<FN>
1. Includes short-term capital gains of $0.26 in 1989; $0.06 in 1990; $0.34 in
1991; $0.06 in 1992; $0.09 in 1993; and $0.07 in 1994, which are taxable to
shareholders at ordinary income rates.
2. From inception 6/30/88 to 12/31/88.
</TABLE>
<PAGE>
Portfolio of Investments (Value in thousands)
T. Rowe Price Small-Cap Value Fund / December 31, 1994
Common Stocks & Warrants--94.6%
FINANCIAL--14.9%
Value
--------
BANK & TRUST--3.7%
200,000shs. *Commercial Federal.................... $4,225
1,386 *First National Bank of Anchorage...... 2,079
96,500 Glacier Bancorp....................... 1,604
450,000 *Guardian Bancorp...................... 281
450,000wts. *Guardian Bancorp, 1/1/99.............. 5
80,000shs. Hawkeye Bancorp....................... 1,540
38,000 Redwood Empire Bancorp................ 271
380,500 *Silicon Valley Bancshares............. 5,137
15,142
INSURANCE--6.6%
175,000 Intercargo............................ 1,444
55,000 *Markel................................ 2,282
240,000 *[daggar]Milwaukee Insurance Group............. 2,460
232,575 *Mutual Assurance...................... 6,047
168,500 Poe & Associates...................... 3,665
500,000 Presidential Life..................... 2,625
235,000 Re Capital............................ 2,879
160,000 *United Insurance...................... 5,440
26,842
FINANCIAL SERVICES--4.6%
60,000 Allied Capital........................ 787
251,248 Allied Capital Commercial............. 4,177
267,500 Allied Capital II..................... 3,645
135,000 *Allied Capital Lending................ 1,401
220,000 BHC Financial......................... 1,952
250,000 Foothill Group (Class A).............. 3,750
30,000 Money Store........................... 555
5,000 Piper, Jaffray........................ 52
88,200 Quick & Reilly........................ 2,503
18,822
TOTAL FINANCIAL 60,806
CONSUMER NONDURABLES--15.4%
BEVERAGES--0.3%
198,413 *[double dagger]Chalone Wine Group.................... 913
142,857wts. *[double dagger]Chalone Wine Group, 7/19/98........... 164
1,077
FOOD PROCESSING--1.5%
70,000shs. *Smithfield Foods...................... 2,240
135,000 Thorn Apple Valley.................... 3,847
6,087
HOSPITAL SUPPLIES/HOSPITAL
MANAGEMENT--7.1%
210,000shs. Allied Healthcare Products............ $3,465
48,500 *E-Z-EM (Class A)...................... 206
41,860 *E-Z-EM (Class B)...................... 168
200,000 *IGEN.................................. 1,075
205,000 Landauer.............................. 3,408
230,000 *Lunar................................. 4,140
176,000 National Health Investors............. 4,598
441,825 Owens & Minor......................... 6,296
400,000 *[daggar]Safeguard Health...................... 3,700
125,000 Sterile Concepts...................... 2,000
29,056
MISCELLANEOUS CONSUMER PRODUCTS--6.5%
160,000 Boston Acoustics...................... 2,920
150,000 *Chic By H.I.S......................... 1,426
198,750 Culp.................................. 1,987
100,000 *Donnkenny............................. 1,500
350,000 *ERO................................... 2,887
110,000 Fab Industries........................ 3,424
300,000 Horace Small Apparel ADR.............. 1,800
100,000 *Mace Security International........... 200
219,253 [daggar]Rauch Industries...................... 1,891
223,200 Rival................................. 3,906
240,000 Superior Surgical Mfg................. 3,000
125,000 Thomas Industries..................... 1,797
26,738
TOTAL CONSUMER NONDURABLES 62,958
CONSUMER SERVICES--14.5%
SPECIALTY MERCHANDISERS--5.3%
450,000 *CSS Industries........................ 7,762
125,000 *Designs............................... 875
112,600 Frederick's of Hollywood (Class A).... 450
250,100 Frederick's of Hollywood (Class B).... 875
223,608 Genovese Drug Stores (Class A)........ 2,544
478,400 *Hancock Fabrics....................... 4,246
80,905 Haverty Furniture..................... 951
100,000 *InaCom................................ 700
370,800 *[daggar]S & K Famous Brands................... 2,642
45,000 *Vans.................................. 355
21,400
<PAGE>
ENTERTAINMENT & LEISURE--5.6%
50,000 Bowl America (Class A)................ 800
150,000 *Carmike Cinemas (Class A)............. 3,450
292,094 *Consolidated Products................. 2,848
257,500shs. La Quinta Inns........................ $5,504
112,500 *Longhorn Steaks....................... 956
470,000 *[daggar]Seattle Filmworks..................... 8,107
100,000 *Uno Restaurant........................ 1,263
22,928
MEDIA & COMMUNICATIONS--3.6%
130,000 *[daggar]Courier............................... 2,145
51,865 Grey Advertising...................... 7,832
640,000 *MDC Corp. (Class A)................... 1,186
250,000 *[daggar]Saga Communications................... 3,594
14,757
TOTAL CONSUMER SERVICES 59,085
CONSUMER CYCLICALS--4.8%
AUTOMOBILES & RELATED--1.2%
81,250 Myers Industries...................... 1,138
200,000 *[daggar]Republic Automotive Parts............. 2,687
100,000 *TBC................................... 925
4,750
BUILDING & REAL ESTATE--2.1%
125,000 Bradley Real Estate................... 1,906
305,000 [daggar]Homeowners Group...................... 248
74,000 Liberty Homes (Class A)............... 684
146,156 Puerto Rican Cement................... 4,111
80,000 Sun Communities....................... 1,800
8,749
MISCELLANEOUS CONSUMER DURABLES--1.5%
75,000 *Chromcraft Revington.................. 1,650
52,000 Juno Lighting......................... 923
100,000 Pulaski Furniture..................... 1,600
135,300 *Stanley Furniture..................... 1,353
120,000 *Winsloew Furniture.................... 735
6,261
TOTAL CONSUMER CYCLICALS 19,760
TECHNOLOGY--7.2%
ELECTRONIC COMPONENTS--0.3%
58,700 [daggar]Badger Meter.......................... 1,394
ELECTRONIC SYSTEMS--0.7%
57,900 *CEM................................... 637
175,000 Instron............................... 2,188
2,825
INFORMATION PROCESSING--2.8%
200,000 *[daggar]CMG Information Services.............. 4,650
280,000 *[daggar]DH Technology......................... 6,720
11,370
AEROSPACE & DEFENSE--3.4%
289,400shs. *[daggar]COMARCO............................... $2,424
170,000 *Nichols Research...................... 2,167
175,000 Raven Industries...................... 3,500
150,000 *Tech-Sym.............................. 3,525
35,000 *Woodward Governor..................... 2,310
13,926
TOTAL TECHNOLOGY 29,515
CAPITAL EQUIPMENT--2.7%
MACHINERY--2.7%
165,000 Alamo Group........................... 2,661
268,000 Farrel................................ 1,407
200,000 *[daggar]K-Tron................................ 2,150
100,000 Scotsman Industries................... 1,712
400,000 *Sudbury............................... 2,350
61,900 Versa Technologies.................... 851
11,131
TOTAL CAPITAL EQUIPMENT 11,131
BUSINESS SERVICES & TRANSPORTATION--19.3%
COMPUTER SERVICE & SOFTWARE--3.5%
180,000 Analysts International................ 3,690
180,000 *GBC Technologies...................... 1,170
186,200 *Keane................................. 4,422
200,000 *State of the Art...................... 1,375
138,800 [daggar]Technalysis........................... 1,527
125,000 *VMARK Software........................ 2,219
14,403
DISTRIBUTION SERVICES--0.4%
180,000 VWR................................... 1,530
ENVIRONMENTAL--2.6%
258,500 BHA Group (Class A)................... 3,247
400,000 *EMCON................................. 1,550
100,000 *Groundwater Technology................ 1,350
250,000 *Handex Environmental Recovery......... 2,094
102,006 Heidemij N.V.......................... 905
200,000 *TRC................................... 1,600
10,746
TRANSPORTATION SERVICES--3.3%
410,000 *[daggar]Builders Transport.................... 4,459
70,000 International Shipholding............. 1,365
361,500 Intertrans............................ 4,699
200,000 *KLLM Transport........................ 2,938
13,461
<PAGE>
MISCELLANEOUS BUSINESS SERVICES--9.5%
500,000shs. AMRESCO............................... $3,375
574,500 *[daggar]Electro Rent.......................... 9,479
150,000 *Insituform Technologies (Class A)..... 1,744
140,000 [daggar]L.E. Myers............................ 1,505
380,000 McGrath RentCorp...................... 6,460
90,000 Mine Safety Appliances................ 4,050
163,000 *[daggar]Right Management Consultants.......... 3,301
325,000 [daggar]Tab Products.......................... 2,234
30,000 *TETRA Technologies.................... 356
330,000 Unitog................................ 6,105
38,609
TOTAL BUSINESS SERVICES & TRANSPORTATION 78,749
ENERGY --4.8%
ENERGY SERVICES--3.1%
85,000 *BJ Services........................... 1,435
100,000 *Enterra............................... 1,900
95,800 ICO................................... 359
100,000 Moorco International.................. 1,475
120,000 *Newpark Resources..................... 2,880
200,000 *Offshore Logistics.................... 2,600
63,800 Pitt-DesMoines........................ 1,978
12,627
EXPLORATION & PRODUCTION--1.2%
225,000 *[daggar]Convest Energy........................ 1,013
130,800 Devon Energy.......................... 2,387
100,000 *HS Resources.......................... 1,762
5,162
GAS TRANSMISSION--0.5%
120,000 [daggar]AlaTenn Resources..................... 1,980
TOTAL ENERGY 19,769
PROCESS INDUSTRIES--2.6%
DIVERSIFIED CHEMICALS--1.5%
300,000 [daggar]Aceto................................. 4,200
108,600 LeaRonal.............................. 1,996
6,196
SPECIALTY CHEMICALS--1.1%
175,000 *Specialty Chemical Resources.......... 525
108,800 *Sybron Chemical....................... 1,686
125,000 Synalloy.............................. 2,219
4,430
TOTAL PROCESS INDUSTRIES 10,626
BASIC MATERIALS --4.7%
METALS--1.8%
301,000shs. *Lone Star Technologies................ $2,107
195,000 *Material Sciences..................... 3,096
150,000 Steel Technologies.................... 1,950
7,153
MINING--1.6%
550,000 *Dayton Mining......................... 1,588
745,000 *[daggar]International Gold Resources.......... 2,103
[double dagger]
372,500wts. *[daggar]International Gold Resources, 4/7/95.. 85
[double dagger]
40,000shs. Pegasus Gold.......................... 455
313,000 *TVX Gold.............................. 2,112
37,000 *[double dagger]TVX Gold.............................. 250
6,593
MISCELLANEOUS MATERIALS--1.3%
175,000 Oil-Dri............................... 3,041
70,000 Penn Virginia......................... 2,205
5,246
TOTAL BASIC MATERIALS 18,992
INVESTMENT COMPANIES--1.0%
320,963 First Financial Fund.................. 4,092
TOTAL INVESTMENT COMPANIES 4,092
MISCELLANEOUS STOCKS--2.7% 10,883
TOTAL COMMON STOCKS & WARRANTS
(COST $330,910) 386,366
Convertible Preferred Stocks--0.9%
80,000 ICO, $25.00........................... 1,360
41,000 Pacific Crest Capital, Series A....... 718
203,000 Redwood Empire Bancorp,
7.875%, Series A.................... 1,624
TOTAL CONVERTIBLE PREFERRED STOCKS (COST $5,077) 3,702
Convertible Bonds--2.1%
$700,000 [daggar]Builders Transport, Sub. Deb.,
8.00%, 8/15/05...................... 592
277,000 [daggar]COMARCO, Sub. Deb., 9.75%,
4/15/00............................. 256
646,000 Consolidated Products, Sub. Deb.,
10.00%, 11/30/02.................... 2,067
2,200,000 DAKA International, 7.00%,
3/15/03............................. 2,728
<PAGE>
$3,000,000 First Republic Bancorp,
Cv. Sub. Deb., 7.25%, 12/1/02....... $2,775
247,250 Macneal-Schwendler, 7.875%,
8/18/04............................. 208
TOTAL CONVERTIBLE BONDS (COST $8,109) 8,626
Corporate Bonds--0.3%
1,000,000 Dayton Mining, 7.00%, 1/31/99......... 1,330
TOTAL CORPORATE BONDS (COST $1,000) 1,330
Short-Term Investments--2.6%
CERTIFICATES OF DEPOSIT--0.3%
1,000,000 Societe Generale, 4.80%, 3/1/95....... 1,000
COMMERCIAL PAPER--2.3%
2,000,000 Caisse des Depots et Consignations,
6.02%, 1/17/95...................... 1,991
$3,000,000 Dover, 6.08%, 1/9/95.................. $2,987
2,000,000 General Electric Capital, 6.00%,
1/12/95............................. 1,992
586,000 President & Fellows Harvard College,
6.00%, 1/3/95....................... 586
2,000,000 Wool International, 6.05%, 1/19/95.... 1,988
9,544
TOTAL SHORT-TERM INVESTMENTS
(COST $10,544) 10,544
TOTAL INVESTMENTS IN SECURITIES--
100.5% (COST $355,640) $410,568
- ------------------------------------------------------------------------------
* Non-income producing [daggar] Affiliated company
[double dagger] Security contains some restrictions as to public resale -
total of such securities at year-end amounts to 0.86% of net
assets.
Statement of Assets and Liabilities
T. Rowe Price Small-Cap Value Fund / December 31, 1994
(Amounts in thousands)
ASSETS
Investments in securities, at value
Affiliated companies (cost $60,835)................ $77,546
Other companies (cost $294,805) ................... 333,022
----------------------
Total investments in securities.................... 410,568
Other assets......................................... 3,591
----------------------
Total assets......................................... 414,159
LIABILITIES.......................................... 5,727
----------------------
NET ASSETS........................................... $408,432
----------------------
----------------------
NET ASSETS CONSISTING OF:
Accumulated net investment income - net of
distributions...................................... 242
Accumulated realized gains/losses - net of
distributions...................................... 5,243
Net unrealized gain.................................. 54,928
Paid-in-capital applicable to 30,474,976 shares of
$0.01 par value capital stock outstanding:
1,000,000,000 shares authorized.................... 348,019
----------------------
NET ASSETS........................................... $408,432
----------------------
----------------------
NET ASSET VALUE PER SHARE............................ $13.40
----------------------
----------------------
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of Operations
T. Rowe Price Small-Cap Value Fund / Year Ended December 31, 1994
(Amounts in thousands)
INVESTMENT INCOME
Income
Dividends (including $452 from affiliated issues).. $6,764
Interest........................................... 1,611
----------------------
Total income....................................... 8,375
----------------------
Expenses
Investment management.............................. 3,047
Shareholder servicing.............................. 867
Custody and accounting............................. 143
Prospectus and shareholder reports................. 72
Registrations...................................... 56
Proxy and annual meeting........................... 35
Legal and auditing................................. 30
Directors.......................................... 16
Miscellaneous...................................... 13
----------------------
Total expenses..................................... 4,279
----------------------
Net investment income................................ 4,096
----------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on securities...................... 27,741
Change in net unrealized gain or loss on securities.. (38,135)
----------------------
Net realized and unrealized loss..................... (10,394)
----------------------
DECREASE IN NET ASSETS FROM OPERATIONS............... $ (6,298)
----------------------
----------------------
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of Changes in Net Assets
T. Rowe Price Small-Cap Value Fund
Year Ended
December 31,
----------------------
1994 1993
---------- ----------
(Amounts in thousands)
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income...................... $4,096 $3,647
Net realized gain.......................... 27,741 14,148
Change in net unrealized gain or loss...... (38,135) 63,340
---------- ----------
Increase (decrease) in net assets from
operations............................... (6,298) 81,135
---------- ----------
Distributions to shareholders
Net investment income...................... (3,980) (2,991)
Net realized gain.......................... (26,157) (10,470)
---------- ----------
Decrease in net assets from distributions.. (30,137) (13,461)
---------- ----------
Capital share transactions/1/
Shares sold................................ 96,644 236,014
Distributions reinvested................... 28,782 12,756
Shares redeemed............................ (132,675) (128,349)
---------- ----------
Increase (decrease) in net assets from
capital share transactions............... (7,249) 120,421
---------- ----------
Increase (decrease) in net assets............ (43,684) 188,095
NET ASSETS
Beginning of year............................ 452,116 264,021
---------- ----------
End of year.................................. $408,432 $452,116
---------- ----------
---------- ----------
- --------------------------------------------------------------------
/1/Capital share transactions
(number of shares)
Shares sold................................ 6,579 17,918
Distributions reinvested................... 2,184 891
Shares redeemed............................ (9,091) (9,504)
---------- ----------
Increase (decrease) in capital shares
outstanding.............................. (328) 9,305
---------- ----------
---------- ----------
- --------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
Notes to Financial Statements
T. Rowe Price Small-Cap Value Fund / December 31, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price 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 or by an independent pricing service.
Short-term debt securities are valued at their cost which, when combined with
accrued interest, approximates fair value.
For purposes of determining the Fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
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) Currency translation - Assets and liabilities are converted into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated into
U.S. dollars at the prevailing exchange rate on the dates of such
transactions. The effect of changes in foreign exchange rates on realized and
unrealized security gains or losses is reflected as a component of such gains
or losses.
D) 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 and may differ from those determined in accordance with
generally accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term and U.S.
Government securities, aggregated $89,577,000 and $100,708,000, respectively,
for the year ended December 31, 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 December 31, 1994, the aggregate cost of investments for federal income
tax and financial reporting purposes was $355,640,000 and net unrealized gain
aggregated $54,928,000, of which $84,116,000 related to appreciated
investments and $29,188,000 to depreciated investments.
<PAGE>
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, of which $239,000 was payable at December 31, 1994. The fee is computed
daily and paid monthly, and consists 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. At December 31, 1994, and for the year then ended, the effective
annual Group Fee rate was 0.34%. The Fund pays a pro rata share of the Group
Fee based on the ratio of its net assets to those of the Group.
In addition, the Fund has entered into agreements with the Manager and two
wholly-owned subsidiaries of the Manager, pursuant to which the Fund receives
certain other services. The Manager computes the daily share price and
maintains the financial records of the Fund. T. Rowe Price Services, Inc.
(TRPS) is the Fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the Fund. T. Rowe Price Retirement
Plan Services, Inc. provides subaccounting and recordkeeping services for
certain retirement accounts invested in the Fund. The Fund incurred expenses
pursuant to these related party agreements totaling approximately $768,000 for
the year ended December 31, 1994, of which $77,000 was payable at year end.
<PAGE>
Financial Highlights
T. Rowe Price Small-Cap Value Fund
<TABLE>
For a share outstanding throughout each
--------------------------------------------
Year Ended December 31,
--------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR.. $14.68 $12.28 $10.37 $8.09 $9.53
-------- -------- -------- -------- --------
Investment Activities
Net investment income............. 0.13 0.12 0.11 0.13* 0.23*
Net realized and unrealized gain
(loss).......................... (0.35) 2.73 2.05 2.61 (1.31)
Total from Investment Activities.... (0.22) 2.85 2.16 2.74 (1.08)
-------- -------- -------- -------- --------
Distributions
Net investment income............. (0.14) (0.10) (0.10) (0.12) (0.24)
Net realized gain................. (0.92) (0.35) (0.15) (0.34) (0.12)
-------- -------- -------- -------- --------
Total Distributions ................ (1.06) (0.45) (0.25) (0.46) (0.36)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR........ $13.40 $14.68 $12.28 $10.37 $8.09
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- ---------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return........................ (1.4)% 23.3% 20.9% 34.2%* (11.3)%*
Ratio of Expenses to Average
Net Assets........................ 0.97% 1.05% 1.25% 1.25%* 1.25%*
Ratio of Net Investment Income
to Average Net Assets............. 0.93% 0.91% 0.98% 1.31%* 2.57%*
Portfolio Turnover Rate............. 21.4% 11.8% 12.1% 30.5% 33.1%
Net Assets, End of Year
(in thousands).................... $408,432 $452,116 $264,021 $53,228 $26,438
- ---------------------------------------------------------------------------------
<FN>
* Excludes expenses in excess of a 1.25% voluntary expense limitation in
effect through December 31, 1993.
</TABLE>
<PAGE>
Report of Independent Accountants
To the Shareholders and Board of Directors
of T. Rowe Price Small-Cap Value Fund, Inc.
We have audited the accompanying statement of assets and liabilities of T.
Rowe Price Small-Cap Value Fund, Inc., including the portfolio of investments,
as of December 31, 1994, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of December 31, 1994, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights,
referred to above, present fairly, in all material respects, the financial
position of T. Rowe Price Small-Cap Value Fund, Inc. as of December 31, 1994,
the results of its operations, the changes in its net assets and financial
highlights for each of the respective periods stated in the first paragraph in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
January 23, 1995
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