SemiAnnual Report
T. Rowe Price Value Fund
June 30, 1995
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 Value Fund.
T. Rowe Price
Investment With Confidence (Registered Trademark)
VAL
Fellow Shareholders
The equity market advanced sharply in the second quarter, continuing the trend
established at the beginning of the year. The 20.2% advance over the first
half is the strongest since the first half of 1987 and ranks eighth since
1926. It has been a perfect environment for stocks, with expectations of a
soft landing for the economy, falling interest rates, good corporate earnings,
and heavy demand for equities. It is difficult to see how the situation can
improve.
Your fund continued to perform extremely well in the second quarter of
the year. One of the characteristics of a value investment approach is the
need for a reasonably long time horizon. We make investments that we expect to
bear fruit over several years rather than months, and we are, therefore, all
the more pleased by the returns your fund generated in the first half of 1995.
It trailed the unmanaged Standard & Poor's 500 Stock Index slightly in the
second quarter, but strongly outperformed both the index and its peer group
average in the first half.
Performance Comparison
Periods Ended 6/30/95
3 Months 6 Months
_____________________
Value Fund 8.5% 23.4%
S&P 500 9.6 20.2
Lipper Growth & Income
Fund Average 8.1 16.8
Dividend Distribution
On June 27, your Board of Directors declared a second quarter dividend of
$0.07 per share, bringing the total for 1995 to $0.14 per share. The second
quarter distribution was paid on June 29 to shareholders of record on June 27.
You should have received your check or statement reflecting the distribution.
Portfolio Review
Our investment approach focuses on companies we believe are undervalued in
terms of price/earnings ratios, price to cash flow, price to assets or private
market value, or some combination of these measures. We believe that
undervalued companies provide investors with attractive risk and return
opportunities, and historical evidence supports this view.
Despite the ebullient market, we have still been able to identify
appealing stocks. As always, we are drawn toward out-of-favor companies. We
invested in several retailers, including Dayton Hudson, Petrie Stores, and
Nordstrom, and cyclical companies such as Chrysler, Federal-Mogul, and
Southern Pacific Rail. Their stocks had come under pressure, and we liked
their inviting valuations and significant potential for appreciation.
Other undervalued stocks in the portfolio include Chris-Craft Industries,
a company rich in media assets; Telephone and Data Systems, which has strong
telecommunications and cellular properties; and USX-Marathon, an energy
development and production firm with extensive oil and gas reserves. We also
made investments in stocks whose prices, in our view, have declined to bargain
basement levels, such as U.S. Industries, a spin-off from British industrial
management conglomerate Hanson; Brooklyn Bancorp; and Canadian oil field
services company Nowsco Well Services.
Genentech is our largest holding and perhaps most intriguing investment.
Because of a special agreement the company struck with the Swiss multinational
company Roche, Genentech shareholders are guaranteed a cash return, which
could rise if the new product pipeline proves more rewarding than anticipated.
The stock has appreciation potential and little downside risk, in our view. We
also initiated positions in two insurance companies, UNUM and Home Beneficial,
both of which have strong business franchises and valuations too attractive to
overlook. Among stocks eliminated from the portfolio was Lotus Development,
which was acquired by IBM at a price substantially higher than our purchase
price.
We increased the common stock portion of the portfolio to 83% of assets
from 75% at the end of the first quarter and reduced cash reserves to 11% from
14%. The bond portion was eliminated from the small 3% weighting, since we
believe the rally there is largely over.
Chart 1 - Security Diversification
Summary and Outlook
The stock market's powerful advance so far this year surprised many observers,
including us. Our current view is that the overall market is fairly high in
terms of most measures of value, and many investors appear to have thrown
caution and risk aversion to the wind. Our outlook is for modest stock returns
during the rest of the year, and we believe investors should be prepared for
increased volatility such as we experienced after the close of our reporting
period.
However, in any stock market environment we expect to find investments
meeting our value criteria. Out-of-favor stocks are almost always available,
even in generally overvalued markets. We will continue to seek opportunities
with the most attractive risk and return characteristics and will proceed with
caution in the months ahead.
As always, we appreciate your confidence and support.
Respectfully submitted,
Brian C. Rogers
President and Chairman of the
Investment Advisory Committee
July 19, 1995
Twenty-Five Largest Holdings
June 30, 1995
Percent of
Company Net Assets
____________________________ ____________
Genentech 2.4%
Federal-Mogul 2.0
Southern Pacific Rail 1.9
UNUM 1.9
Provident Bankshares 1.8
Automatic Data Processing 1.8
Dayton Hudson 1.7
Chris-Craft Industries 1.7
Chrysler 1.5
Telephone and Data Systems 1.5
Home Beneficial (Class B) 1.4
U.S. Industries 1.4
Petrie Stores 1.4
U.S. Bancorp 1.4
Brooklyn Bancorp 1.4
Time Warner 1.3
Perrigo 1.3
New York Times (Class A) 1.3
California Federal Bank 1.3
GTE 1.2
Nowsco Well Service 1.2
USX-Marathon 1.2
ADT 1.2
Nordstrom 1.2
Shawmut National 1.2
________________________________________________________________
Total 37.6%
Major Portfolio Changes
Three Months Ended June 30, 1995
LARGEST PURCHASES*
Cost (000)
__________
Genentech $570
Southern Pacific Rail 498
UNUM 405
Dayton Hudson 397
Telephone and Data Systems 386
U.S. Industries 347
Chrysler 340
Perrigo 339
Home Beneficial (Class B) 338
Exide 318
LARGEST SALES**
Proceeds (000)
______________
Exide $400
U.S. Treasury Notes, 7.125%, 2/29/00 308
Honeywell 260
Lotus Development 256
Trinova 240
U.S. Treasury Notes, 7.25%, 8/15/04 207
Schlumberger 189
Kansas City Southern Industries 145
McKesson 140
Santa Fe Pacific Gold 137
*All positions added
**All positions eliminated
Statement of Net Assets
T. Rowe Price Value Fund / June 30, 1995 (Unaudited)
(values in thousands)
Common Stocks - 82.5%
FINANCIAL - 19.5%
Value
_________
BANK & TRUST - 11.1%
5,000 shs. AmSouth Bancorporation. . . . . . . . . $ 163
5,000 Bank of Boston. . . . . . . . . . . . . 187
10,000 * Brooklyn Bancorp. . . . . . . . . . . . 335
25,000 * California Federal Bank
(Class A) . . . . . . . . . . . . . . 328
30,000 Hibernia (Class A). . . . . . . . . . . 266
4,000 Mellon Bank . . . . . . . . . . . . . . 167
6,000 Midlantic . . . . . . . . . . . . . . . 239
17,000 Provident Bankshares. . . . . . . . . . 453
9,000 Shawmut National. . . . . . . . . . . . 287
14,000 U. S. Bancorp . . . . . . . . . . . . . 337
2,762
INSURANCE - 5.6%
2,500 American General. . . . . . . . . . . . 84
2,500 American National Insurance . . . . . . 152
17,000 Home Beneficial (Class B) . . . . . . . 355
4,000 Kemper. . . . . . . . . . . . . . . . . 186
8,800 NYMAGIC . . . . . . . . . . . . . . . . 140
10,000 UNUM. . . . . . . . . . . . . . . . . . 469
1,386
FINANCIAL SERVICES - 2.8%
3,000 AMBAC . . . . . . . . . . . . . . . . . 120
2,000 Fannie Mae. . . . . . . . . . . . . . . 189
10,000 PXRE. . . . . . . . . . . . . . . . . . 235
3,000 Sallie Mae. . . . . . . . . . . . . . . 141
685
Total Financial 4,833
UTILITIES - 6.3%
TELEPHONE - 2.7%
9,000 GTE . . . . . . . . . . . . . . . . . . 307
10,000 Telephone and Data Systems. . . . . . . 364
671
ELECTRIC UTILITIES - 3.6%
9,000 Centerior Energy. . . . . . . . . . . . 87
10,000 Entergy . . . . . . . . . . . . . . . . 241
18,000 Niagara Mohawk. . . . . . . . . . . . . 265
4,000 PacifiCorp. . . . . . . . . . . . . . . 75
10,000 Potomac Electric Power. . . . . . . . . 215
883
Total Utilities 1,554
CONSUMER NONDURABLES - 14.5%
BEVERAGES - 1.1%
3,000 shs. Brown-Forman (Class B). . . . . . . . . $ 100
8,000 Coca-Cola FEMSA ADR . . . . . . . . . . 170
270
HOSPITAL SUPPLIES/HOSPITAL
MANAGEMENT - 1.8%
10,000 * FHP International . . . . . . . . . . . 232
7,000 U. S. Healthcare. . . . . . . . . . . . 215
447
PHARMACEUTICALS - 6.9%
3,000 * Biogen. . . . . . . . . . . . . . . . . 134
4,000 * Chiron. . . . . . . . . . . . . . . . . 259
12,000 * Genentech . . . . . . . . . . . . . . . 583
30,000 * Perrigo . . . . . . . . . . . . . . . . 330
12,000 * Roberts Pharmaceutical. . . . . . . . . 261
4,000 Upjohn. . . . . . . . . . . . . . . . . 152
1,719
MISCELLANEOUS CONSUMER PRODUCTS - 4.7%
2,500 American Brands . . . . . . . . . . . . 99
9,000 Brunswick . . . . . . . . . . . . . . . 153
10,000 * Chic by H.I.S.. . . . . . . . . . . . . 113
5,000 Dial. . . . . . . . . . . . . . . . . . 124
25,000 * Dixie Yarns . . . . . . . . . . . . . . 169
10,000 Liz Claiborne . . . . . . . . . . . . . 212
2,500 Philip Morris . . . . . . . . . . . . . 186
9,000 Stride Rite . . . . . . . . . . . . . . 93
1,149
Total Consumer Nondurables 3,585
CONSUMER SERVICES - 14.1%
GENERAL MERCHANDISERS - 3.2%
6,000 Dayton Hudson . . . . . . . . . . . . . 431
8,000 * Hills Stores. . . . . . . . . . . . . . 192
13,000 TJX . . . . . . . . . . . . . . . . . . 172
795
SPECIALTY MERCHANDISERS - 4.3%
12,000 CML Group . . . . . . . . . . . . . . . 95
10,000 * Federated Department Stores . . . . . . 258
10,000 Hancock Fabrics . . . . . . . . . . . . 91
7,000 Nordstrom . . . . . . . . . . . . . . . 289
50,000 Petrie Stores . . . . . . . . . . . . . 337
1,070
ENTERTAINMENT & LEISURE - 1.1%
25,000 * Host Marriott . . . . . . . . . . . . . 265
MEDIA & COMMUNICATIONS - 5.5%
12,000 shs. * Chris-Craft Industries. . . . . . . . . $ 420
13,000 Comcast (Class A) . . . . . . . . . . . 237
14,000 New York Times (Class A). . . . . . . . 329
3,000 Time Warner . . . . . . . . . . . . . . 124
7,000 Vodafone ADR. . . . . . . . . . . . . . 265
1,375
Total Consumer Services 3,505
CONSUMER CYCLICALS - 8.4%
AUTOMOBILES & RELATED - 2.9%
8,000 Chrysler. . . . . . . . . . . . . . . . 383
18,000 Federal-Mogul . . . . . . . . . . . . . 329
712
BUILDING & REAL ESTATE - 4.4%
12,000 General Growth Properties,
REIT. . . . . . . . . . . . . . . . . 244
10,000 McArthur/Glen Realty, REIT. . . . . . . 146
12,000 SECURITY CAPITAL PACIFIC
TRUST . . . . . . . . . . . . . . . . 209
10,000 Simon Property Group. . . . . . . . . . 251
20,000 South West Property Trust,
REIT. . . . . . . . . . . . . . . . . 230
1,080
MISCELLANEOUS CONSUMER DURABLES - 1.1%
10,000 Toro. . . . . . . . . . . . . . . . . . 280
Total Consumer Cyclicals 2,072
TECHNOLOGY - 3.8%
ELECTRONIC SYSTEMS - 3.0%
25,000 * ADT . . . . . . . . . . . . . . . . . . 294
10,000 BW/IP (Class A) . . . . . . . . . . . . 184
35,000 Semi-Tech (Global ) ADR . . . . . . . . 275
753
AEROSPACE & DEFENSE - 0.8%
5,000 Litton Industries . . . . . . . . . . . 184
Total Technology 937
CAPITAL EQUIPMENT - 3.3%
ELECTRICAL EQUIPMENT - 1.9%
10,000 * Holophane . . . . . . . . . . . . . . . 224
4,500 Hubbell (Class B) . . . . . . . . . . . 254
478
MACHINERY - 1.4%
10,000 AMTROL. . . . . . . . . . . . . . . . . 184
25,000 Farrel. . . . . . . . . . . . . . . . . 150
334
Total Capital Equipment 812
BUSINESS SERVICES & TRANSPORTATION - 5.4%
MISCELLANEOUS BUSINESS SERVICES - 1.3%
25,000 shs. * U.S. Industries . . . . . . . . . . . . $ 341
RAILROADS - 4.1%
15,000 Canadian Pacific. . . . . . . . . . . . 261
5,000 Conrail . . . . . . . . . . . . . . . . 278
30,000 * Southern Pacific Rail . . . . . . . . . 472
1,011
Total Business Services & Transportation 1,352
ENERGY - 5.2%
ENERGY SERVICES - 2.5%
2,000 * Geophysique (FRF) . . . . . . . . . . . 119
7,000 Helmerich & Payne . . . . . . . . . . . 206
30,000 Nowsco Well Service . . . . . . . . . . 304
629
INTEGRATED PETROLEUM - DOMESTIC - 2.7%
3,000 Amerada Hess. . . . . . . . . . . . . . 147
15,000 * Crown Central Petroleum . . . . . . . . 225
15,000 USX-Marathon. . . . . . . . . . . . . . 296
668
Total Energy 1,297
BASIC MATERIALS - 0.9%
MINING - 0.9%
3,500 Newmont Mining. . . . . . . . . . . . . 147
8,000 * Pegasus Gold. . . . . . . . . . . . . . 81
Total Basic Materials 228
CONGLOMERATES - 0.7%
80,000 LONRHO (GBP). . . . . . . . . . . . . . 188
Total Conglomerates 188
Miscellaneous Common Stocks - 0.4% 94
Total Common Stocks (Cost $18,834) 20,457
Preferred Stocks - 1.7%
200 Cleveland Electric, $90,
Series S. . . . . . . . . . . . . . . 172
7,000 Manville, $2.70, Cum.,
Series B. . . . . . . . . . . . . . . 175
Miscellaneous Preferred Stocks - 0.3% 71
Total Preferred Stocks (Cost $387) 418
T. Rowe Price Value Fund / Statement of Net Assets (Unaudited)
Convertible Preferred Stocks - 1.7%
3,000 shs. Federal-Mogul (144a), $3.875,
Series D. . . . . . . . . . . . . . . $ 168
18,000 Mascotech, $1.20. . . . . . . . . . . . 257
Total Convertible Preferred Stocks (Cost $424) 425
Convertible Bonds - 3.0%
$1,000,000 Automatic Data Processing,
LYONS, Zero
Coupon, 2/20/12 . . . . . . . . . . . 443
100,000 Rouse, Sub. Deb.,
5.75%, 7/23/02. . . . . . . . . . . . 91
200,000 Time Warner, Sub. Deb.,
8.75%, 1/10/15. . . . . . . . . . . . 209
Total Convertible Bonds (Cost $709) 743
Short-Term Investments - 11.8%
CERTIFICATES OF DEPOSIT - 2.0%
500,000 Societe Generale,
6.05%, 7/7/95 . . . . . . . . . . . . 500
COMMERCIAL PAPER - 9.8%
$500,000 Caisse des Depots et
Consignations, 4(2),
5.95%, 7/27/95. . . . . . . . . . . . $ 497
40,000 Cargill Financial Services,
6.10%, 7/3/95 . . . . . . . . . . . . 40
200,000 Ciesco L.P., 5.65%, 9/14/95 . . . . . . 197
300,000 Countrywide Funding,
6.00%, 7/18/95. . . . . . . . . . . . 299
121,000 Delaware Funding,
5.90%, 8/18/95. . . . . . . . . . . . 119
300,000 Kellogg Company,
5.94%, 7/31/95. . . . . . . . . . . . 298
150,000 Kredietbank N.A. Finance,
5.98%, 7/3/95 . . . . . . . . . . . . 149
500,000 New Center Asset Trust,
6.00%, 7/6/95 . . . . . . . . . . . . 494
325,000 Unilever Capital, 4(2),
6.00%, 7/5/95 . . . . . . . . . . . . 324
2,417
Total Short-Term Investments (Cost $2,917) 2,917
Total Investments in Securities - 100.7%
of Net Assets (Cost - $23,271) $24,960
Other Assets Less Liabilities . . . . . . . . . . . . . . . . (179)
________
Net Assets Consist of: Value
___________
Accumulated net investment
income - net of distributions. . . . . . $ 5
Accumulated net realized
gain/loss - net of distributions . . . . 1,208
Net unrealized gain
(loss) . . . . . . . . . . . . . . . . . 1,689
Paid-in-capital applicable to 1,983,601
shares of $0.0001 par value capital
stock outstanding; 1,000,000,000
shares authorized. . . . . . . . . . . . . 21,879
_______
NET ASSETS . . . . . . . . . . . . . . . . $24,781
_______
_______
NET ASSET VALUE PER SHARE. . . . . . . . . $12.49
______
______
* Non-income producing
REIT Real Estate Investment Trust
4(2) Commercial Paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of
1933, as amended, and may be sold only to dealers in that program or
other "accredited investors."
144a Security was purchased pursuant to Rule 144a under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers - total of such securities at period-end amounts
to 0.7% of net assets.
FRF French franc
GBP British sterling
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price Value Fund / Six Months Ended June 30, 1995 (Unaudited)
(in thousands)
INVESTMENT INCOME
Income
Dividend. . . . . . . . . . . . . . . . . . . . . $ 182
Interest . . . . . . . . . . . . . . . . . . . . 91
______
Total income. . . . . . . . . . . . . . . . . . . 273
______
Expenses
Shareholder servicing . . . . . . . . . . . . . . 57
Custody and accounting. . . . . . . . . . . . . . 45
Registration. . . . . . . . . . . . . . . . . . . 6
Legal and audit . . . . . . . . . . . . . . . . . 5
Organization. . . . . . . . . . . . . . . . . . . 5
Directors . . . . . . . . . . . . . . . . . . . . 4
Prospectus and shareholder reports. . . . . . . . 2
Reimbursed by Manager . . . . . . . . . . . . . . (39)
______
Total expenses. . . . . . . . . . . . . . . . . . 85
______
Net investment income. . . . . . . . . . . . . . . . 188
______
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Securities. . . . . . . . . . . . . . . . . . . . 1,206
Options . . . . . . . . . . . . . . . . . . . . . 6
______
Net realized gain (loss). . . . . . . . . . . . . 1,212
______
Change in net unrealized gain or loss on:
Securities. . . . . . . . . . . . . . . . . . . . 1,624
Options . . . . . . . . . . . . . . . . . . . . . (9)
______
Change in net unrealized gain or loss . . . . . . 1,615
______
Net realized and unrealized gain (loss). . . . . . . 2,827
______
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS. . . . . . . . . . . . . . $3,015
______
______
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Value Fund (Unaudited)
(in thousands)
From Sept. 30, 1994
Six Months (Commencement
Ended of Operations) to
June 30, 1995 Dec. 31, 1994
_____________ ___________________
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income . . . . . . . $ 188 $ 46
Net realized gain (loss) . . . . . . 1,212 1
Change in net unrealized
gain or loss . . . . . . . . . . . 1,615 75
_______ _______
Increase (decrease) in net
assets from operations . . . . . . 3,015 122
_______ _______
Distributions to shareholders
Net investment income. . . . . . . . (227) (53)
Net realized gain. . . . . . . . . . - (5)
_______ _______
Decrease in net assets
from distributions . . . . . . . . (227) (58)
Capital share transactions*
Shares sold. . . . . . . . . . . . . 16,831 9,176
Distributions reinvested . . . . . . 220 55
Shares redeemed. . . . . . . . . . . (3,952) (567)
_______ _______
Increase (decrease) in net
assets from capital
share transactions . . . . . . . . 13,099 8,664
_______ _______
Net equalization . . . . . . . . . . . 44 22
_______ _______
Increase (decrease)
in net assets. . . . . . . . . . . . 15,931 8,750
_______ _______
NET ASSETS
Beginning of period. . . . . . . . . . 8,850 100
_______ _______
End of period. . . . . . . . . . . . . $24,781 $ 8,850
_______ _______
_______ _______
*Share information
Shares sold. . . . . . . . . . . . . 1,445 905
Distributions reinvested . . . . . . 18 5
Shares redeemed. . . . . . . . . . . (343) (56)
_______ _______
Increase (decrease) in
shares outstanding . . . . . . . . 1,120 854
_______ _______
_______ _______
The accompanying notes are an integral part of these financial statements.
Notes To Financial Statements
T. Rowe Price Value Fund / June 30, 1995 (Unaudited)
Note 1 - Significant Accounting Policies
T. Rowe Price 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 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.
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) 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 changes in foreign exchange rates on realized and
unrealized security gains and losses is reflected as a component of such gains
and losses.
C) Premiums and Discounts - Premiums and discounts on debt securities are
amortized for both financial and tax reporting purposes.
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. The fund follows the practice of
equalization under which undistributed net investment income per share is
unaffected by fund shares sold or redeemed.
Note 2 - Investment Transactions
Purchases and sales of portfolio securities, other than short-term and U.S.
government securities, aggregated $17,769,000 and $6,182,000, respectively,
for the six months ended June 30, 1995. Purchases and sales of U.S. government
securities aggregated $301,000 and $801,000, respectively, for the six months
ended June 30, 1995.
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, 1995, the aggregate cost of investments for federal income
tax and financial reporting purposes was $23,271,000 and net unrealized gain
aggregated $1,689,000, of which $1,911,000 related to appreciated investments
and $222,000 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. The fee is computed daily and paid monthly, consisting of an Individual
Fund Fee equal to 0.35% of average daily net assets and a Group Fee. The Group
Fee is based on the combined assets of certain mutual funds sponsored by the
Manager or Rowe-Price Fleming International, Inc. (the Group). The Group Fee
rate ranges from 0.48% for the first $1 billion of assets to 0.31% for assets
in excess of $34 billion. At June 30, 1995, and for the six months 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.
Under the terms of the investment management agreement, the Manager is
required to bear any expenses through December 31, 1996 which would cause the
fund's ratio of expenses to average net assets to exceed 1.10%. Thereafter
through December 31, 1998, the fund is required to reimburse the Manager for
these expenses, provided that average net assets have grown or expenses have
declined sufficiently to allow reimbursement without causing the fund's ratio
of expenses to average net assets to exceed 1.10%. Pursuant to this agreement,
$53,000 of management fees were not accrued by the fund for the six months
ended June 30, 1995, and $39,000 of other expenses were borne by the Manager.
Additionally, $45,000 of 1994 unaccrued fees and expenses are subject to
reimbursement through December 31, 1998.
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 $74,000 for the six
months ended June 30, 1995, of which $16,000 was payable at period-end.
Financial Highlights
T. Rowe Price Value Fund (Unaudited)
For a share outstanding throughout each period
_______________________________________________
From Sept. 30, 1994
Six Months (Commencement
Ended of Operations)
June 30, 1995 to December 31, 1994
_______________________________________________
NET ASSET VALUE,
BEGINNING OF PERIOD. . . . $10.24 $10.00
Investment Activities
Net investment income. . . 0.14* 0.08*
Net realized and unrealized
gain (loss). . . . . . . 2.25 0.23
_______ _______
Total from Investment
Activities . . . . . . . . 2.39 0.31
_______ _______
Distributions
Net investment income. . . (0.14) (0.07)
_______ _______
NET ASSET VALUE,
END OF PERIOD. . . . . . . $12.49 $10.24
_______ _______
_______ _______
RATIOS / SUPPLEMENTAL DATA
Total Return . . . . . . . . . 23.4%* 3.1%*
Ratio of Expenses to
Average Net Assets . . . . 1.10%!* 1.10%!*
Ratio of Net Investment
Income to Average
Net Assets . . . . . . . . 2.45%!* 3.16%!*
Portfolio Turnover Rate. . . . 98.5%! 30.8%!
Net Assets, End of Period
(in thousands) . . . . . . $24,781 $8,850
! Annualized.
* Excludes expenses in excess of a 1.10% voluntary expense limitation in
effect through December 31, 1996.
Chart1 - Security Diversification pie chart
pie chart showing 83% stocks, 11% cash, 4% convertibles, and 2% preferred
