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T. ROWE PRICE
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SMALL-CAP VALUE FUND, INC.
Supplement to Prospectus dated May 1, 1994
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Effective January 31, 1995, the Board of Directors of the Small-
Cap Value Fund (the "Fund") has determined that circumstances are
suitable to begin accepting purchases of Fund shares from new
investors. The purchase of Fund shares had previously been
limited to persons who were shareholders of the Fund, as of March
4, 1993; participants of employer-sponsored retirement plans
administered by T. Rowe Price Retirement Plan Services, Inc.;
participants of employer-sponsored retirement plans administered
through the T. Rowe Price 401(k) Century Plan; and defined
contribution plans with assets of $50,000,000 or more not
administered by T. Rowe Price Retirement Plan Services, Inc. In
connection with this action, the last paragraph on page 2 of the
prospectus will be deleted.
Effective immediately the following will be added to the Fund's
prospectus.
SMALL-CAP VALUE FUND REDEMPTION FEE
The T. Rowe Price Small-Cap Value Fund is designed for long-term
investors willing to accept the risks associated with an
investment in common stocks of small companies that are not
widely held by institutional investors. Such securities tend to
be less liquid than larger company stocks.
The Fund is not designed for short-term traders, whose frequent
purchases, redemptions, and exchanges can generate substantial
cash flow. These cash flows can unnecessarily disrupt the Fund's
investment program. Short-term traders often redeem when the
market is most turbulent, thereby forcing the sale of underlying
securities held by the Fund at the worst possible time as far as
long-term investors are concerned. Additionally, short-term
trading drives up the Fund's transaction costs--measured by both
commissions and bid/ask spreads--which are borne by remaining
long-term investors. To help deter short-term trading activity in
the Fund's shares, the Fund will apply a 1% fee to all
redemptions of shares purchased on or after April 10, 1995 and
held for less than one year. The fee should help offset the
increased transaction costs associated with short-term trading.
Specific Guidelines:
Redemption Fee. Commencing on Monday, April 10, 1995, the Fund
will begin to apply a 1% fee to all redemptions (including
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exchanges) of shares held in the Fund for less than one year.
Only shares purchased on or after April 10, 1995, and held for
less than one year, will be assessed the 1% fee. To benefit Fund
shareholders, all proceeds from the redemption fee will be paid
directly to the Fund (not to T. Rowe Price Associates).
o Shares owned as of Friday, April 7, 1995 will not be subject
to the redemption fee regardless of when they are sold.
o Shares purchased through reinvested distributions (dividends
and capital gains) will not be subject to the redemption fee
when they are sold.
o Shares held in retirement plans (e.g., 401(k), 403(b), 457,
Keogh, Profit Sharing Plans, and Money Purchase Pension
Plans) are not subject to the redemption fee.
o Shares held in IRAs and SEP-IRAs are subject to the 1%
redemption fee. These are individual retirement
accounts; they are not retirement plans.
o Shares purchased through systematic investing (i.e.
automatic asset builder, through which shares are purchased
through payroll, social security checks, or checking
accounts, or automatic exchange) are subject to the
redemption fee.
o The Fund will use the first-in, first-out (FIFO) method to
determine the one-year holding period. Under this method,
the date of the redemption or exchange will be compared to
the earliest purchase date of shares held in the account.
If this holding period is less than one year, the redemption
fee will be assessed.
o In determining "one year," the Fund will use the
anniversary date of a transaction. Thus, shares
purchased on April 12, 1995, for example, will be
subject to the fee if they are redeemed on or prior to
April 11, 1996. If they are redeemed on or after April
12, 1996, they will not be subject to the fee.
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The date of this supplement is January 26, 1995
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