PRICE T ROWE SMALL CAP VALUE FUND INC, N-30D, 1996-08-12

PRICE T ROWE SMALL CAP VALUE FUND INC
N-30D, 1996-08-12

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<PAGE>

Semiannual Report

Small-Cap
Value
Fund

June 30, 1996

T. Rowe Price

[LOGO APPEARS HERE]
<PAGE>

REPORT HIGHLIGHTS

. The stock market rally continued during the six months ended June 30, with
small-cap stocks keeping pace with those of larger companies.

. To protect the interest of shareholders and reduce the cash inflow, the fund
was closed indefinitely to new investors on March 1.

. Your fund returned 12.40% and 24.99% for the first half and past 12 months,
respectively, exceeding the Russell 2000, a widely used benchmark for the
small-cap market.

. Our major purchases had no theme but reflected stocks we felt represented
excellent value, including TBC and Analogic. Several sales were triggered by
merger offers.

. We feel that the rise in interest rates is creating a less favorable equity
market environment and hold higher-than-usual cash reserves as a result.
<PAGE>

Fellow Shareholders

The stock market began 1996 on a strong note and, despite minor setbacks along
the way, enjoyed excellent returns during the first half of the year. Small-cap
stocks kept pace with larger companies as all indices recorded double-digit
gains for the period.

Performance Comparison
<TABLE>
<CAPTION>

Periods Ended 6/30/96 6 Months 12 Months
<S> <C> <C>
Small-Cap Value Fund 12.40% 24.99%
................................................
S&P 500 10.10 26.00
................................................
Russell 2000 Index 10.39 23.92
................................................
Nasdaq Composite * 12.63 26.95
................................................
*Principal only.
</TABLE>

For the first half, your fund rose 12.40%, surpassing the 10.39% return of the
Russell 2000 Index and the 10.10% return of the unmanaged Standard & Poor's 500
Stock Index, widely used benchmarks for small- and large-cap stocks. More
important, the 12 months just completed marked the eighth consecutive "June
year" of positive returns since the fund's inception in June 1988 (see chart
following this letter). That is a surprising statistic in view of the fund's
declines in calendar 1990 (-11.27%) and 1994 (-1.38%), but it proves once again
that the same statistics viewed in different ways can appear to give
substantially different results.

MARKET ENVIRONMENT

The first half of the year was characterized by a remarkable surge of investor
interest in small-cap equities. Industry statistics indicate that public
purchases of aggressive growth mutual funds (a category that includes small-cap
funds) rose to record levels. This strong flow of new cash clearly had an impact
on prices; portfolio managers felt compelled to buy stocks even if their
valuations were unattractive. Speculative fever broke out in such industries as
biotechnology, medical devices, and any stock related to the Internet. Seeing
the cash-driven demand for stock, Wall Street investment bankers responded by
bringing a nearly unprecedented volume of new issues and secondary stock
offerings to market.

Early in the year, much of the interest in small companies centered on small-cap
growth stocks and on technology. The value sector in which

1
<PAGE>

your fund invests experienced positive, but more muted, gains. In June, however,
technology and growth stocks fell sharply, while value stocks held up relatively
well. As I write this letter in July, our small-cap value stocks continue to
give back gains grudgingly, while high-growth stocks show the volatility typical
of their sector.

FUND CLOSING

Small-Cap Value Fund participated fully in the cash flow surge into small-cap
stocks during the first quarter. The fund received net investments of $115
million (the second highest quarterly flow in its history), a pace that
threatened to impair our ability to manage in a manner consistent with our
prospectus. Therefore, on March 1, 1996, Small-Cap Value Fund closed to new
investors in order to sharply reduce the cash inflow and to protect the
interests of our current shareholders. As noted in our letter to you at the
time, the closing does not affect your ability to add to or redeem from your
existing account.

PORTFOLIO TURNOVER

A shareholder recently commented on Small-Cap Value Fund's low turnover and
asked why it was so much lower than that of other small-cap funds. Turnover
refers to the buying and selling of investment positions in the fund. In simple
terms, if a fund were to buy and sell every holding once a year, the turnover
would be 100%. Small-Cap Value's turnover has averaged 16% per year since 1992,
well below the average of 77% reported by Morningstar (an independent research
firm) for its Small Company Funds Average.

By itself, low turnover is not inherently better or worse than high turnover. In
fact, if a portfolio manager were particularly astute at timing purchases and
sales, high turnover could benefit overall fund returns. But every transaction
entails a cost: brokerage commissions; the difference between a stock's bid and
ask price; and, for larger trades, the impact on the stock's short-term price
caused by the transaction itself. Moreover, the smaller the market
capitalization and the more obscure the company, generally the higher the
transaction cost. We keep turnover low precisely because we want to limit these
costs that can total as much as 5% of a stock's value. Where we have particular
insight into a stock's valuation, we will not hesitate to buy or sell for the
fund's benefit. But we find that the high cost of trading in small-cap value
stocks "raises the bar" and makes us think twice about any transaction where the
perceived benefit is marginal.

While the brokerage community may disagree with our practice, we think that our
measured turnover rate is best for the long-term interests of our shareholders.

2
<PAGE>

IT IS COMFORTING
TO KNOW THAT INFORMED BUYERS SEE THE SAME VALUE . . .THAT WE DO.

PORTFOLIO ACTIVITY

As shown in the Major Portfolio Changes table that follows this letter, our
purchases during the first half reflected a broad spectrum of industries
including wholesale distribution, insurance, medical devices, and computer
leasing. TBC, the largest purchase, has been a portfolio holding since 1988. It
is the nation's largest distributor of replacement automobile tires. Even as a
new management team is revitalizing operations, Wall Street has sold the stock
down to bargain levels. If management is as successful as we forecast, investors
will again discover TBC, and the stock will be an excellent holding. Analogic,
the largest new purchase, is an electronics company making the key components
for magnetic resonance imaging machines. Nearly all of the world's major medical
equipment manufacturers buy from Analogic, which has just embarked on a new
product cycle. Furon, a California-based specialty plastics manufacturer, is
experiencing a rebound in sales after several years of sluggish performance. We
took advantage of temporary weakness in the stock in January to initiate a
position.

Four of the largest sales -- Nowsco Well Service, Rauch Industries, Technalysis,
and International Gold Resources -- were triggered by merger offers from larger
companies. It is always comforting to know that informed buyers see the same
value in many of our companies that we do. Their merger proposals act as a
catalyst for the fund to realize that value before the public market has come to
a similar conclusion. In percentage terms, Cityscape Financial (up 150% for the
six months) was one of our biggest gainers. While the company has a bright
future, we felt that the stock's extraordinary rise more than recognized the
potential, and therefore we sold our position.

OUTLOOK

In January, I noted that historic, annualized returns for small-cap stocks have
averaged 12% (according to Ibbotson Associates). Small-Cap Value Fund has
matched that return in the first half alone. With interest rates again rising,
the environment for the stock market is becoming less favorable. The speculative
activity mentioned earlier raises further caution flags about the near-term
outlook for small-cap stocks. We have allowed our net cash position to remain
higher than

3
<PAGE>

average at about 14% and continue to seek low volatility, unrecognized small-cap
stocks for our investments. If a substantial correction does occur, we will use
the opportunity to become more fully invested to participate in the subsequent
recovery.

Respectfully submitted,

/s/ Preston G. Athey

Preston G. Athey
President and
Chairman of the Investment Advisory Committee

July 17, 1996

Portfolio Highlights

MAJOR PORTFOLIO CHANGES

Listed in descending order of size

6 Months Ended June 30, 1996

<TABLE>
<CAPTION>
Ten Largest Purchases Ten Largest Sales
- --------------------- -----------------
<S> <C>
TBC Nowsco Well Service **
........................................ ..........................................
Analogic * Cityscape Financial **
........................................ ..........................................
Furon * Lunar
........................................ ..........................................
CORT Business Allied Capital II
........................................ ..........................................
Landauer BHC Financial
........................................ ..........................................
Poe & Brown Rauch Industries **
........................................ ..........................................
Gibraltar Steel Technalysis **
........................................ ..........................................
Leasing Solutions * Mercantile Bancorporation **
........................................ ..........................................
Quidel * International Gold Resources **
........................................ ..........................................
International Shipholding DAKA International **
........................................ ..........................................
</TABLE>

* Position added
** Position eliminated

4
<PAGE>

T. Rowe Price Small-Cap Value Fund

Portfolio Highlights
<TABLE>
<CAPTION>

TWENTY-FIVE LARGEST HOLDINGS Percent of
Net Assets
6/30/96
- -----------------------------------------------------------
<S> <C>
Electro Rent 1.7%
...........................................................
Poe & Brown 1.3
...........................................................
Seattle Filmworks 1.3
...........................................................
United Insurance 1.2
...........................................................
Saga Communications 1.1
- -----------------------------------------------------------
Silicon Valley Bancshares 1.1
...........................................................
CSS Industries 1.1
...........................................................
Analogic 1.1
...........................................................
Landauer 1.1
...........................................................
McGrath RentCorp 1.1
- -----------------------------------------------------------
TBC 1.0
...........................................................
Rival 1.0
...........................................................
Commercial Federal 1.0
...........................................................
Unitog 1.0
...........................................................
CORT Business 0.9
- -----------------------------------------------------------
Grey Advertising 0.9
...........................................................
PXRE 0.9
...........................................................
Consolidated Products 0.9
...........................................................
Cross Timbers Oil 0.9
...........................................................
Furon 0.9
- -----------------------------------------------------------
AMTROL 0.9
...........................................................
Chromcraft Revington 0.8
...........................................................
Alamo Group 0.8
...........................................................
Columbus Realty Trust 0.8
...........................................................
Hancock Fabrics 0.8
- -----------------------------------------------------------
Total 25.6%
</TABLE>

5
<PAGE>

T. Rowe Price Small-Cap Value Fund

PERFORMANCE COMPARISON

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 a broad-based average or index. The index
return does not reflect expenses, which have been deducted from the fund's
return.

[LINE GRAPH OF SMALL-CAP VALUE FUND APPEARS HERE]

AVERAGE ANNUAL COMPOUND TOTAL RETURN

This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.

<TABLE>
<CAPTION>
Since Inception
Periods Ended 06/30/96 1 Year 3 Years 5 Years Inception Date
<S> <C> <C> <C> <C> <C>
Small-Cap Value Fund 24.99% 16.51% 18.48% 14.18% 06/30/88
..........................................................................................
</TABLE>

Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.

6
<PAGE>

T. Rowe Price Small Cap Value Fund
- --------------------------------------------------------------------------------
Unaudited

Financial Highlights For a share outstanding throughout each period

<TABLE>
<CAPTION>
6 Months Year
Ended Ended
6/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 16.53 $ 13.40 $ 14.68 $ 12.28 $ 10.37 $ 8.09
......................................................................
Investment activities
Net investment income 0.12 0.18 0.13 0.12 0.11 0.13*
Net realized and
unrealized gain (loss) 1.93 3.74 (0.35) 2.73 2.05 2.61
......................................................................
Total from
investment activities 2.05 3.92 (0.22) 2.85 2.16 2.74
......................................................................
Distributions
Net investment income - (0.18) (0.14) (0.10) (0.10) (0.12)
Net realized gain - (0.61) (0.92) (0.35) (0.15) (0.34)
......................................................................
Total distributions - (0.79) (1.06) (0.45) (0.25) (0.46)
......................................................................
NET ASSET VALUE
End of period $ 18.58 $ 16.53 $ 13.40 $ 14.68 $ 12.28 $ 10.37
----------------------------------------------------------------------
Ratios/Supplemental Data

Total return 12.40% 29.29% (1.38)% 23.30% 20.87% 34.18%*
Ratio of expenses to
average net assets 0.97%+ 0.98% 0.97% 1.05% 1.25% 1.25%*
...................................................................................................
Ratio of net investment
income to average
net assets 1.35%+ 1.59% 0.93% 0.91% 0.98% 1.31%*
...................................................................................................
Portfolio turnover rate 14.7%+ 18.1% 21.4% 11.8% 12.1% 30.5%
...................................................................................................
Average commission
rate paid $ 0.0516 - - - - -
...................................................................................................
Net assets, end of period
(in millions) $ 1,249 $ 936 $ 408 $ 452 $ 264 $ 53
...................................................................................................
</TABLE>

* Excludes expenses in excess of a 1.25% voluntary expense limitation in effect
through 12/31/93.
+ Annualized.

The accompanying notes are an integral part of these financial statements.

7
<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1996

Portfolio of Investments Shares/Par Value
- --------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>

<S> <C> <C>
Common Stocks 81.7%

FINANCIAL 12.3%

Bank and Trust 4.0%
Commercial Federal 325,000 $ 12,431
....................................................................
First Bell Bancorp + 600,000 8,250
....................................................................
First National Bank of Anchorage 5,000 7,713
....................................................................
First Republic Bancorp * 310,000 4,766
....................................................................
Glacier Bancorp 132,000 2,838
....................................................................
Guardian Bancorp * 450,000 0
....................................................................
Guardian Bancorp, warrants, 1/1/99 * 450,000 0
....................................................................
Silicon Valley Bancshares *+ 545,000 14,102
....................................................................
50,100
Insurance 5.9% ...........
Financial Security Assurance Holdings 150,000 4,106
....................................................................
MAIC Holdings * 246,529 9,276
....................................................................
Markel * 55,000 5,060
....................................................................
NYMAGIC 435,000 8,211
....................................................................
Poe & Brown + 650,000 15,965
....................................................................
Presidential Life 500,000 5,156
....................................................................
PXRE + 475,000 11,578
....................................................................
United Insurance * 640,000 14,520
....................................................................
73,872
...........
Financial Services 2.4%

Allied Capital Commercial 470,000 9,371
....................................................................
Allied Capital II 210,000 3,780
....................................................................
Allied Capital Lending 131,000 1,744
....................................................................
BHC Financial 250,000 3,469
....................................................................
Quick & Reilly 138,750 4,509
....................................................................
Sirrom Capital 275,000 7,459
....................................................................
30,332
...........
Total Financial 154,304
...........
</TABLE>

8
<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------

Shares/Par Value
- --------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>

CONSUMER NONDURABLES 9.3%
<S> <C> <C>
Beverages 0.2%

Chalone Wine Group *# 175,000 $ 1,619
....................................................................
Chalone Wine Group, warrants, 7/19/98 *# 142,857 241
....................................................................
1,860
...........
Food Processing 0.6%

Smithfield Foods * 40,000 1,005
....................................................................
Sylvan *+ 456,000 6,071
....................................................................
7,076
...........
Hospital Supplies/Hospital Management 3.0%

Allied Healthcare Products + 500,000 4,438
....................................................................
IGEN * 200,000 1,388
....................................................................
Landauer + 625,000 13,203
....................................................................
Lunar * 140,000 4,917
....................................................................
Owens & Minor 250,000 2,906
....................................................................
Safeguard Health *+ 400,000 7,250
....................................................................
Sterile Concepts 200,000 3,975
....................................................................
38,077
...........
Pharmaceuticals 0.7%

COR Therapeutics * 225,000 2,573
....................................................................
Nexstar Pharmaceuticals * 65,900 1,450
....................................................................
Quidel * 900,000 4,669
....................................................................
8,692
...........
Biotechnology 0.2%

Cell Genesys * 400,000 3,000
....................................................................
3,000
...........
Miscellaneous Consumer Products 4.6%

Applied Extrusion Technologies *+ 750,000 9,469
....................................................................
Boston Acoustics 220,000 4,950
....................................................................
Chic by H.I.S. * 386,600 2,030
....................................................................
Culp + 565,000 7,769
....................................................................
ERO * 500,000 3,062
....................................................................
Fab Industries + 300,000 8,175
....................................................................
Horace Small Apparel ADR 225,000 1,392
....................................................................
Martin Industries 369,500 3,464
....................................................................
Rival + 550,000 12,512
....................................................................
Superior Surgical Mfg. 365,800 4,344
....................................................................
57,167
...........
Total Consumer Nondurables 115,872
...........
</TABLE>

9
<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------

Shares/Par Value
- --------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>

CONSUMER SERVICES 12.1%
<S> <C> <C>
General Merchandisers 0.4%

Fred's (Class A) 420,000 $ 4,620
....................................................................
4,620
...........
Specialty Merchandisers 4.8%

CompuCom Systems * 325,000 3,494
....................................................................
CSS Industries *+ 600,000 14,100
....................................................................
Designs * 400,000 2,425
....................................................................
Frederick's of Hollywood (Class A) 102,600 513
....................................................................
Frederick's of Hollywood (Class B) 265,000 1,193
....................................................................
Genovese Drug Stores (Class A) + 325,000 2,762
....................................................................
Hancock Fabrics 900,000 9,900
....................................................................
Haverty Furniture + 450,000 4,641
....................................................................
InaCom * 250,000 4,703
....................................................................
Pacific Sunwear *+ 290,000 6,887
....................................................................
S & K Famous Brands *+ 425,000 4,037
....................................................................
Stein Mart * 285,000 5,237
....................................................................
59,892
...........
Entertainment and Leisure 3.6%

Bowl America (Class A) 125,000 891
....................................................................
Carmike Cinemas (Class A) * 300,000 8,100
....................................................................
Consolidated Products * 664,989 11,138
....................................................................
Fresh Choice *+ 430,000 3,010
....................................................................
Longhorn Steaks * 112,500 2,784
....................................................................
Seattle Filmworks *+ 950,000 15,794
....................................................................
Uno Restaurant * 500,000 3,750
....................................................................
45,467
...........
Media and Communications 3.3%

Courier + 130,000 2,210
....................................................................
EZ Communications * 300,000 7,238
....................................................................
Grey Advertising 51,865 11,670
....................................................................
MDC Communication * 166,666 1,271
....................................................................
Price Communications *+ 500,000 4,031
....................................................................
Saga Communications (Class A) * 656,250 14,191
....................................................................
40,611
...........
Total Consumer Services 150,590
...........
</TABLE>

<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------

Shares/Par Value
- --------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>

CONSUMER CYCLICALS 7.7%
<S> <C> <C>
Automobiles and Related 2.3%

Myers Industries 200,000 $ 3,725
....................................................................
R & B * 312,500 2,148
....................................................................
Republic Automotive Parts *+ 260,500 3,908
....................................................................
Republic Automotive Parts *+# 25,500 306
....................................................................
TBC *+ 1,500,000 13,031
....................................................................
TPC * 750,000 5,438
....................................................................
28,556
...........
Building and Real Estate 3.9%

Columbus Realty Trust, REIT 511,400 9,908
....................................................................
Homeowners Group *+ 350,000 678
....................................................................
Innkeepers USA, REIT + 700,000 6,913
....................................................................
National Health Investors, REIT 225,000 7,369
....................................................................
Skyline 330,900 8,272
....................................................................
South West Property Trust, REIT 503,600 6,736
....................................................................
Sun Communities, REIT 350,000 9,406
....................................................................
49,282
...........
Miscellaneous Consumer Durables 1.5%

Chromcraft Revington *+ 450,000 10,519
....................................................................
Ellett Brothers + 300,000 1,856
....................................................................
Juno Lighting 250,000 4,234
....................................................................
Stanley Furniture * 150,000 1,575
....................................................................
18,184
...........
Total Consumer Cyclicals 96,022
...........
TECHNOLOGY 5.4%

Electronic Components 1.4%

Analogic 500,000 13,312
....................................................................
Badger Meter 58,700 1,636
....................................................................
Pioneer-Standard Electronics 171,100 2,246
....................................................................
17,194
..........
Electronic Systems 0.5%

BEI Electronics 70,000 700
....................................................................
CEM *+ 236,000 3,216
....................................................................
Instron 188,300 2,542
....................................................................
6,458
...........
</TABLE>

11
<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------

Shares/Par Value
- --------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>

Information Processing 0.7%
<S> <C> <C>
DH Technology * 375,000 $ 8,719
....................................................................
8,719
...........
Telecommunications 0.3%

Digital Systems * 250,000 3,750
....................................................................
3,750
...........
Aerospace and Defense 2.5%

COMARCO *+ 294,400 5,391
....................................................................
Nichols Research * 170,000 5,249
....................................................................
Raven Industries + 370,000 7,770
....................................................................
Tech-Sym * 200,000 5,950
....................................................................
Woodward Governor 76,300 6,962
....................................................................
31,322
...........
Total Technology 67,443
...........
CAPITAL EQUIPMENT 3.9%

Electrical Equipment 0.9%

Holophane * 475,000 7,481
....................................................................
Thomas Industries 225,000 4,303
....................................................................
11,784
...........
Machinery 3.0%

Alamo Group + 556,800 10,162
....................................................................
AMTROL + 488,900 10,695
....................................................................
Farrel 268,000 1,072
....................................................................
K-Tron *+ 223,500 1,816
....................................................................
Scotsman Industries 280,000 5,635
....................................................................
Sudbury * 525,000 4,725
....................................................................
Versa Technologies 250,000 3,406
....................................................................
37,511
...........
Total Capital Equipment 49,295
...........
BUSINESS SERVICES AND
TRANSPORTATION 15.2%

Computer Service and Software 1.9%

Analysts International 200,000 8,275
....................................................................
Keane * 225,000 8,297
....................................................................
State of the Art * 285,000 5,237
....................................................................
VMARK Software * 200,000 1,862
....................................................................
23,671
...........
</TABLE>

<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------

Shares/Par Value
- --------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>

Distribution Services 1.1%
<S> <C> <C>
Allou Health & Beauty * 450,000 $ 3,094
....................................................................
JP Foodservice * 172,500 4,248
....................................................................
Sullivan Dental Products 250,000 2,563
....................................................................
VWR 252,000 4,126
....................................................................
14,031
............
Environmental 1.0%

BHA Group (Class A) + 473,000 6,504
....................................................................
EMCON *+ 600,000 2,438
....................................................................
Heidemij ADR 102,006 1,026
....................................................................
TRC * 325,000 1,909
....................................................................
11,877
............
Transportation Services 2.0%

Builders Transport *+ 445,000 3,671
....................................................................
Frozen Food Express 113,800 1,266
....................................................................
International Shipholding + 522,700 9,213
....................................................................
KLLM Transport *+ 250,000 3,187
....................................................................
M.S. Carriers * 300,000 6,225
....................................................................
Midwest Express Holdings * 57,000 1,831
....................................................................
25,393
...........
Miscellaneous Business Services 9.2%

Aaron Rents (Class B) 367,800 4,804
....................................................................
Ameridata Technologies * 229,040 3,636
....................................................................
AMRESCO 350,000 6,016
....................................................................
Business Resource Group *+ 380,000 1,900
....................................................................
CORT Business *+ 600,000 11,700
....................................................................
Electro Rent *+ 897,000 21,752
....................................................................
Insituform Technologies (Class A) * 575,000 4,492
....................................................................
Leasing Solutions * 400,000 6,200
....................................................................
McGrath RentCorp + 587,200 13,139
....................................................................
Mine Safety Appliances 100,600 4,263
....................................................................
MYR Group + 260,000 2,958
....................................................................
Right Management Consultants *+ 250,000 8,875
....................................................................
Sealright 452,000 4,972
....................................................................
Tab Products + 400,000 2,950
....................................................................
UniFirst 271,900 5,744
....................................................................
Unitog 435,000 12,071
....................................................................
115,472
.............
Total Business Services and Transportation 190,444
.............
</TABLE>

<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------

Shares/Par Value
- --------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>

ENERGY 3.5%
<S> <C> <C>
Energy Services 1.2%

BJ Services * 85,000 $ 2,986
....................................................................
Newpark Resources * 90,000 3,307
....................................................................
Offshore Logistics * 425,000 5,923
....................................................................
Pitt-DesMoines 63,800 2,712
....................................................................
14,928
..........
Exploration and Production 1.9%

Cross Timbers Oil 450,000 11,137
....................................................................
Devon Energy 130,800 3,205
....................................................................
HS Resources *+ 800,000 9,300
....................................................................
23,642
..........
Gas Transmission 0.4%

Atrion + 183,600 4,590
....................................................................
4,590
..........
Total Energy 43,160
..........
PROCESS INDUSTRIES 4.8%

Diversified Chemicals 0.8%

Aceto + 400,000 6,200
....................................................................
LeaRonal 166,900 4,172
....................................................................
10,372
..........
Specialty Chemicals 2.1%

Furon 436,300 10,799
....................................................................
Hauser Chemical Research *+ 600,000 4,125
....................................................................
Sybron Chemical *+ 450,000 6,356
....................................................................
Synalloy 269,000 4,304
....................................................................
25,584
..........
Paper and Paper Products 0.8%

Mosinee Paper 358,666 9,729
....................................................................
9,729
..........
Building and Construction 1.1%

Giant Cement * 445,000 5,674
....................................................................
Puerto Rican Cement 257,000 7,999
....................................................................
13,673
..........
Total Process Industries 59,358
..........
</TABLE>

<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------

Shares/Par Value
- --------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>

BASIC MATERIALS 4.1%
<S> <C> <C>
Metals 2.4%
Ashanti Goldfields 87,500 $ 1,728
....................................................................
Cold Metal Products *+ 481,900 3,193
....................................................................
Commercial Intertech 14,600 376
....................................................................
Gibraltor Steel * 428,700 8,574
....................................................................
Lone Star Technologies * 354,000 3,938
....................................................................
Material Sciences * 258,000 4,451
....................................................................
Sinter Metals (Class A) *+ 287,200 5,026
....................................................................
Steel Technologies 199,300 3,039
....................................................................
30,325
...........
Mining 1.0%

Dayton Mining * 1,441,000 8,646
....................................................................
Golden Shamrock Mines (AUD) * 500,000 448
....................................................................
TVX Gold * 350,000 2,537
....................................................................
11,631
...........
Miscellaneous Materials 0.7%

Oil-Dri + 354,500 5,273
....................................................................
Penn Virginia 100,000 3,563
....................................................................
8,836
...........
Total Basic Materials 50,792
...........
INVESTMENT COMPANIES 0.4%

First Financial Fund 429,690 5,532
....................................................................
Total Investment Companies 5,532
...........
Miscellaneous Common Stocks 3.0% 37,803
...........
Total Common Stocks (Cost $769,300) 1,020,615
...........
Preferred Stocks 0.3%
Prime Retail, REIT, Cum., 10.50%, Series A 175,000 4,244
....................................................................
Total Preferred Stocks (Cost $3,332) 4,244
...........
Convertible Preferred Stocks 0.7%

ICO, $25.00 100,000 2,200
....................................................................
Prime Retail, REIT, 8.50%, Series B 300,000 5,550
....................................................................
</TABLE>

15
<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------

Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>

<S> <C> <C>
Redwood Empire Bancorp, Noncum., 7.875%, Series A 125,000 $ 1,328
................................................................................
Total Convertible Preferred Stocks (Cost $9,289) 9,078
.........
Convertible Bonds 0.7%

Builders Transport, Sub. Deb., 6.50%, 5/1/11 $ 250,000 174
................................................................................
Builders Transport, Sub. Deb., 8.00%, 8/15/05 700,000 623
................................................................................
First Republic Bancorp, Sub. Deb., 7.25%, 12/1/02 4,000,000 4,584
................................................................................
Glycomed, Sub. Deb., 7.50%, 1/1/03 2,000,000 1,750
................................................................................
PerSeptive Biosystems (144a), Sub. Deb., 8.25%, 8/15/01 2,000,000 1,710
................................................................................
Total Convertible Bonds (Cost $7,829) 8,841
.........
Corporate Bonds 0.2%

Owens & Minor, Sr. Sub. Notes, 10.875%, 6/1/06 2,000,000 2,028
................................................................................
Total Corporate Bonds (Cost $2,033) 2,028
.........

Short-Term Investments 16.1%

Certificates of Deposit 1.6%

Commerzbank, 5.31%, 7/1/96 10,000,000 10,000
................................................................................
Westdeutsche Landesbank Girozentrale (London)
5.39%, 7/11/96 10,000,000 10,000
................................................................................
20,000
.........
Commercial Paper 12.7%

Bell Atlantic Network Funding, 5.37%, 7/3/96 10,000,000 9,997
................................................................................
BHF Finance (Delaware), 5.35%, 7/10/96 10,000,000 9,987
................................................................................
Caisse des Depots et Consignations, 4(2), 5.27%, 7/1/96 10,000,000 10,000
................................................................................
Ciesco, 4(2), 5.35%, 7/15 - 7/23/96 20,000,000 19,946
................................................................................
Corporate Asset Funding, 4(2), 5.31%, 7/18/96 10,000,000 9,975
................................................................................
Enel, 5.32%, 7/11/96 10,000,000 9,985
................................................................................
France Telecom, 5.27%, 7/10/96 10,000,000 9,987
................................................................................
Golden Mgrs Acceptance Corporation, 5.42%, 7/17/96 10,000,000 9,976
................................................................................
Investments in Commercial Paper through a joint account
5.49-5.68%, 7/1/96 6,142,021 6,142
................................................................................
Island Finance Puerto Rico, 5.42%, 7/29/96 3,500,000 3,485
................................................................................
Korea Development Bank, 5.30%, 8/28/96 10,000,000 9,915
................................................................................
Preferred Receivables Funding, 5.40%, 7/10/96 10,000,000 9,986
................................................................................
Province of Quebec, 5.30%, 7/12/96 10,000,000 9,984
................................................................................
</TABLE>

16
<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------

Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>

<S> <C> <C> <C>
Siemens, 5.35%, 8/12/96 $ 10,000,000 $ 9,938
................................................................................
Statoil (Den Norske Stats Oljeselskap), 5.32%, 7/9/96 10,000,000 9,988
................................................................................
Sysco, 4(2), 5.32%, 7/2/96 10,000,000 9,998
................................................................................
159,289
...........
Medium-Term Notes 1.8%

Federal National Mortgage Assn., VR, 5.395-5.405%
9/27-10/7/96 10,000,000 10,000
................................................................................
Morgan Stanley Group, 5.613%, 1/31/97 7,000,000 7,002
................................................................................
PHH, VR, 5.415%, 11/12/96 5,000,000 4,998
................................................................................
22,000
..........
Total Short-Term Investments (Cost $201,289) 201,289
..........
Total Investments in Securities
99.7% of Net Assets (Cost $993,072) $ 1,246,095

Futures Contracts
In thousands
Contract Unrealized
Expiration Value Gain (Loss)
------------ ---------- -----------
Long, 130 Russell 2000 Stock Index
contracts, $1,250,000 of Federal National
Mortgage Assn. Notes
pledged as initial margin 9/96 $ 22,669 $ (409)

Net payments (receipts) of variation
margin to date 676
..........

Variation margin receivable
(payable) on open futures contracts 267

Other Assets Less Liabilities 3,102
...............
NET ASSETS $ 1,249,464
---------------
</TABLE>

+ Affiliated company
* Non-income producing
# Securities contain some restrictions as to public resale -- total of such
securities at year-end amounts to 0.17% of net assets.
REIT Real Estate Investment Trust
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 year-end amounts to
0.14% of net assets.
AUD Australian dollar

The accompanying notes are an integral part of these financial statements.

17
<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------
Unaudited June 30, 1996

Statement of Assets and Liabilities
- --------------------------------------------------------------------------
In thousands

<S> <C>
Assets
Investments in securities, at value
Affiliated companies (cost $306,996) $ 384,863
Other companies (cost $686,076) 861,232
...........
Total investments in securities 1,246,095
Other assets 8,243
...........
Total assets 1,254,338
...........
Liabilities

Total liabilities 4,874
...........
NET ASSETS $1,249,464
-----------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 8,003
Accumulated net realized gain/loss - net of distributions 36,076
Net unrealized gain (loss) 252,614
Paid-in-capital applicable to 67,263,344 shares of
$0.01 par value capital stock outstanding;
1,000,000,000 shares authorized 952,771
...........

NET ASSETS $1,249,464
-----------
NET ASSET VALUE PER SHARE $ 18.58
-----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

18
<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------
Unaudited

Statement of Operations
- --------------------------------------------------------------------
In thousands

6 Months
Ended
6/30/96
<S> <C>
Investment Income
Income
Dividend $ 7,152
Interest 5,821
..........
Total income 12,973
..........
Expenses
Investment management 3,801
Shareholder servicing 1,180
Registration 240
Custody and accounting 88
Prospectus and shareholder reports 68
Legal and audit 13
Directors 11
Miscellaneous 18
..........
Total expenses 5,419
..........
Net investment income 7,554
..........
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 22,340
Futures 1,457
Foreign currency transactions (31)
..........
Net realized gain (loss) 23,766
..........
Change in net unrealized gain or loss
Securities 99,240
Futures (543)
Other assets and liabilities
denominated in foreign currencies (7)
..........
Change in net unrealized gain or loss 98,690
..........
Net realized and unrealized gain (loss) 122,456
..........
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $130,010
----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

19
<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------
Unaudited

Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands

6 Months Year
Ended Ended
6/30/96 12/31/95
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ 7,554 $ 9,843
Net realized gain (loss) 23,766 39,731
Change in net unrealized gain or loss 98,690 98,996
.......................
Increase (decrease) in net assets from operations 130,010 148,570
.......................
Distributions to shareholders
Net investment income - (9,636)
Net realized gain - (32,664)
.......................
Decrease in net assets from distributions - (42,300)
.......................
Capital share transactions *
Shares sold 304,868 500,883
Distributions reinvested - 40,668
Shares redeemed (122,149) (119,922)
Redemption fees received 310 94
.......................
Increase (decrease) in net assets from capital
share transactions 183,029 421,723
.......................
Net Assets
Increase (decrease) during period 313,039 527,993
Beginning of period 936,425 408,432
.......................
End of period $1,249,464 $ 936,425
-----------------------
* Share information
Shares sold 17,606 31,422
Distributions reinvested - 2,474
Shares redeemed (7,009) (7,705)
.......................
Increase (decrease) in shares outstanding 10,597 26,191

</TABLE>

The accompanying notes are an integral part of these financial statements.

20
<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1996

Notes to Financial Statements
- --------------------------------------------------------------------------------

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

T. Rowe Price Small-Cap Value Fund, Inc. (the fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company and commenced operations on June 30, 1988.

Valuation Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price at the time 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. Listed securities that are not traded on a
particular day and securities that are regularly traded in the over-the-
counter market are valued at the mean of the latest bid and asked prices.
Other equity securities 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. Financial futures contracts
are valued at closing settlement prices.

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.

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.

Currency Translation Assets and liabilities are translated 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

21
<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------

changes in foreign exchange rates on realized and unrealized security gains
and losses is reflected as a component of such gains and losses.

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 the 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. Payments ("variation margin") made
or received by the fund to settle the daily fluctuations in the value of
futures contracts are recorded as unrealized gain or loss until the
contracts are closed. Unrealized gains and losses on futures contracts are
included in Other assets and in Change in net unrealized gain or loss in the
accompanying financial statements.

NOTE 2 - INVESTMENT TRANSACTIONS

Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.

Futures Contracts At June 30, 1996, the fund was a party to futures
contracts, which provide for the future sale by one party and purchase by
another of a specified amount of a specific financial instrument at an
agreed upon price, date, time, and place. Risks arise from possible
illiquidity of the futures market and from movements in security values.

Commercial Paper Joint Account The fund, and other affiliated funds, may
transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper. All
securities purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity.

Other Purchases and sales of portfolio securities, other than short-term,
aggregated $236,664,000 and $67,648,000, respectively, for the six months
ended June 30, 1996.

22
<PAGE>

T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------

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, 1996, the aggregate cost of investments for federal income tax
and financial reporting purposes was $993,072,000, and net unrealized gain
aggregated $253,023,000, of which $283,621,000 related to appreciated
investments and $30,598,000 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, of which $704,000 was payable at June 30, 1996. 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 0.305% for assets in excess
of $50 billion. At June 30, 1996, and for the six months then ended, the
effective annual group fee rate was 0.33% and 0.34%, respectively. 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., 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 $1,041,000 for the six months ended June 30, 1996, of which
$156,000 was payable at period-end.

23
<PAGE>

T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------

To help shareholders monitor their current investments and make decisions
that accurately reflect their financial goals, T. Rowe Price offers a wide
variety of information and services -- at no extra cost.

KNOWLEDGEABLE SERVICE REPRESENTATIVES

By Phone Shareholder service representatives are available Monday through
Friday from 8 a.m. to 10 p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
Call 1-800-225-5132 to speak directly with a representative who will be able
to assist you with your accounts.

In Person Visit one of our Investor Center locations to meet with a
representative who will be able to assist you with your accounts. You can
also drop off applications or obtain prospectuses and other literature.

AUTOMATED 24-HOUR SERVICES

Tele*Access/(R)/ Call 1-800-638-2587 to obtain information such as account
balance, date and amount of your last transaction, latest dividend payment,
and fund prices and yields. Additionally, you can request prospectuses,
statements, new account and tax forms; reorder checks; and initiate
purchase, redemption, and exchange orders for identically registered
accounts.

T. Rowe Price OnLine Through a personal computer via dial-up modem, you can
replicate all the services available on Tele*Access.

ACCOUNT SERVICES

Checking Write checks for $500 or more on any money market and most bond
fund accounts (except the High Yield and Emerging Markets Bond Funds).

Automatic Investing Build your account over time by investing directly from
your bank account or paycheck with Automatic Asset Builder. Additionally,
Automatic Exchange enables you to move investments systematically from one
fund account to another, such as from a money fund to a stock fund. A low
$50 minimum makes it easy to get started.

24
<PAGE>

T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------

Automatic Withdrawal If you need money from your fund account on a regular
basis, you can establish scheduled, automatic redemptions.

Dividend and Capital Gains Payment Options Reinvest all or some of your
distributions, or take them in cash. We give you maximum flexibility and
convenience.

DISCOUNT BROKERAGE*

Investments Available You can trade stocks, bonds, options, precious
metals, and other securities at a savings over regular commission rates.

To Open an Account Call a shareholder service representative at
1-800-225-5132.

INVESTMENT INFORMATION

Combined Statement A comprehensive overview of your T. Rowe Price accounts
is provided. The summary page gives you earnings by tax category, provides
total portfolio value, and lists your investments by type -- stock, bond,
and money market. Detail pages itemize account transactions by fund.

Shareholder Reports Portfolio managers review the performance of the funds
in plain language and discuss T. Rowe Price's economic outlook.

The T. Rowe Price Report This is a quarterly newsletter with relevant
articles on market trends, personal financial planning, and T. Rowe Price's
economic perspective.

Performance Update This quarterly report reviews recent market developments
and provides comprehensive performance information for each T. Rowe Price
fund.

Insights This library of information includes reports on mutual fund tax
issues, investment strategies, and financial markets.

Detailed Investment Guides Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Personal Strategy Planner, Retirees Financial Guide,
and Retirement Planning Kit (also available on disk for PC use) help you
determine and reach your investment goals.

*T. Rowe Price Discount Brokerage is a division of T. Rowe Price Investment
Services, Inc. Member NASD/SIPC.

25
<PAGE>

For yield, price, last transaction,
and current balance, 24 hours,
7 days a week, call:
1-800-638-2587 toll free

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/(R)/.

[T. ROWE PRICE LOGO APPEARS HERE]

T. Rowe Price Investment Services, Inc., Distributor