<PAGE>
Semiannual Report
VALUE
FUND
- -------------
June 30, 1997
- -------------
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. ROWE PRICE
<PAGE>
Report Highlights
- --------------------------------------------------------------------------------
Value Fund
. The stock market continued strong after a relatively modest start this year,
as good earnings and fairly stable interest rates fueled a strong rally during
the past three months.
. Your fund's return was strong for the six-month period ended June 30,
surpassing the Lipper average but trailing the broad market.
. Our value investment strategy sometimes leads to more moderate returns
relative to the S&P 500, which has been the case so far in 1997.
. We bought several stocks that met our valuation criteria and sold stocks in
companies that were takeover targets or reached our price targets for other
reasons.
. Investors should temper their return expectations for the next few quarters.
However, we believe we can identify promising stocks for the fund in any
market environment.
<PAGE>
Fellow Shareholders
After a strong 1996, the equity market continued to advance sharply in the first
half of 1997. The year began slowly with the market gaining only modestly in the
first several months of the year. April, May, and June, however, were another
matter altogether as the combination of good corporate earnings growth,
generally stable interest rates, and strong investor demand for equities fueled
a sharply rising, almost frenzied, equity market.
<TABLE>
<CAPTION>
- ----------------------
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 6/30/97 6 Months 12 Months
- --------------------------------------------------------------------------------
<S> <C> <C>
Value Fund 17.18% 32.29%
................................................................................
S&P 500 20.61 34.70
................................................................................
Lipper Growth & Income
Funds Average 15.52 28.07
................................................................................
</TABLE>
As shown in the Performance Comparison table, your fund trailed the unmanaged
Standard & Poor's 500 Stock Index in this environment while performing better
than the Lipper average return for similar funds. The same performance pattern
held for the last 12 months. Often in sharply rising markets, funds with a value
orientation such as the Value Fund advance at a more moderate pace than the
general market. This was certainly true in the first half of the year, although
we are pleased with the fund's absolute returns and its favorable comparison
against competitive funds. By the end of June, valuation levels in terms of
price/earnings ratios and dividend yields were at historically expensive levels,
making our task somewhat more challenging.
FIRST HALF DISTRIBUTIONS
On June 25, your Board of Trustees declared a second quarter income dividend of
$0.05 per share. The dividend was paid on June 27 to shareholders of record on
June 25, and you should already have received your check or statement reflecting
it. The fund also paid an income dividend of $0.06 per share and a capital gain
dividend of $0.18 per share at the end of March. All these will be reported on
Form 1099-DIV, which will be mailed to you in January 1998.
1
<PAGE>
PORTFOLIO REVIEW
Our investment approach focuses on companies we consider undervalued in terms of
price-to-earnings, price-to-cash flow, price-to-book value, or some combination
of these measures. We believe investments in such companies give shareholders an
attractive combination of relatively low risk and reasonable return potential.
Our major risk is not that we will lose a large amount on any given investment,
but that a particular holding may not advance as much or as quickly as we hoped.
Often, this investment approach generates return patterns similar to the
proverbial steady but slow tortoise racing the speedy but more erratic hare.
This has been the case so far in 1997.
[PIE CHART APPEARS HERE]
- ----------------------
Sector Diversification
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
All Others 25%
Consumer Cyclicals 5%
Basic Materials 3%
Capital Equipment 6%
Financial 19%
Consumer Services 16%
Consumer Nondurables 16%
Process Industries 10%
</TABLE>
Based on net assets as of 6/30/97.
Throughout the first half of the year, we initiated new investments in a number
of companies meeting our investment criteria. Invariably our approach results in
a very eclectic list of portfolio companies. Recent purchases highlighted in the
Major Portfolio Changes table following this letter ranged from Smith & Nephew
(a U.K.-based medical products company) to RJR Nabisco (a food and tobacco
conglomerate that faces more favorable prospects given a probable resolution of
the tobacco debate) to Owens Corning (a leading manufacturer of building
products) to EXEL (an excess liability insurance company). Using a variety of
valuation techniques helps us uncover investments such as these that offer an
attractive combination of relatively low downside risk and good upside
potential.
Regarding positions eliminated from the portfolio, most of the companies
highlighted in the same table had risen to price levels where their relative
valuations were no longer as appealing to us as when we purchased them. Four of
the companies sold were successful investments since they were acquired by other
companies: Alexander & Alexander, Crestar Financial (originally purchased as
Citizens Bancorp), Petrolite, and Keystone International.
2
<PAGE>
SUMMARY AND OUTLOOK
While your fund operates without paying much attention to the short-term
movements of the overall stock market, we cannot help but be awed by the
market's advance thus far in 1997--and also by the potential risk such a sharp
rally entails.
Coming into the year we were cautious about the market's prospects after
exceptionally good years in 1995 and 1996. We continue to feel that investors
should temper their expectations for returns over the next several quarters.
Whatever the broad market environment, however, we will always strive to
identify promising investments on your behalf.
As always, we appreciate your continued confidence and support.
Respectfully submitted,
/s/ Brian C. Rogers
Brian C. Rogers
President and Chairman of the Investment Advisory Committee
July 18, 1997
<PAGE>
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
- --------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
MAJOR PORTFOLIO CHANGES
Listed in descending order of size
6 Months Ended 6/30/97
<TABLE>
<CAPTION>
Ten Largest Purchases Ten Largest Sales
- --------------------------------------------------------------------------------
<S> <C>
Smith & Nephew * C.R. Bard **
................................................................................
RJR Nabisco * Alexander & Alexander **
................................................................................
EXEL * Crestar Financial **
................................................................................
Hercules * Delta **
................................................................................
Owens Corning * Texas Instruments **
................................................................................
Toys "R" Us * First Brands **
................................................................................
Burlington Northern Santa Fe * Petrolite **
................................................................................
Wheelabrator Technologies * Royal Caribbean Cruises **
................................................................................
TriMas * Philips N.V. ADR**
................................................................................
360 Communications * Keystone International **
................................................................................
</TABLE>
* Positions added
** Positions eliminated
4
<PAGE>
T. Rowe Price Value Fund
- -------------------------------------------------------------------------------
- --------------------
Portfolio Highlights
- -------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percent of
Net Assets
6/30/97
- -------------------------------------------------------------------------------
<S> <C>
Newmont Mining 1.9%
...............................................................................
Amerada Hess 1.6
...............................................................................
ITT 1.6
...............................................................................
EXEL 1.5
...............................................................................
Toys "R" Us 1.4
- -------------------------------------------------------------------------------
FMC 1.4
...............................................................................
Mellon Bank 1.4
...............................................................................
Westinghouse 1.3
...............................................................................
Burlington Northern Santa Fe 1.3
...............................................................................
Allergan 1.3
- -------------------------------------------------------------------------------
Whitman 1.3
...............................................................................
Mercantile Stores 1.3
...............................................................................
Tomkins 1.3
...............................................................................
Hercules 1.2
...............................................................................
ADVANTA 1.2
- -------------------------------------------------------------------------------
Wheelabrator Technologies 1.2
...............................................................................
Mid Ocean Limited 1.2
...............................................................................
TriMas 1.2
...............................................................................
Smith & Nephew 1.2
...............................................................................
RJR Nabisco 1.2
- -------------------------------------------------------------------------------
Great Lakes Chemical 1.1
...............................................................................
Owens Corning 1.1
...............................................................................
St. Paul Companies 1.1
...............................................................................
Witco 1.1
...............................................................................
General Dynamics 1.1
- -------------------------------------------------------------------------------
TOTAL 32.5%
</TABLE>
5
<PAGE>
T. ROWE PRICE 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.
VALUE FUND
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Index Fund-Li Fund-Ar
<S> <C> <C> <C>
9/30/94 10,000.0 10,000.0 10,000.0
6/95 12,019.0 12,723.0 12,723.0
6/96 15,144.0 16,413.0 16,413.0
6/97 20,399.0 21,713.0 21,713.0
</TABLE>
- -------------------------------------
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
This table shows how the fund would have performed if its actual (or cumulative)
returns for the periods shown had been earned at a constant rate each year.
<TABLE>
<CAPTION>
Since Inception
Periods Ended 6/30/97 1 Year Inception Date
---------------------------------------------------------------------
<S> <C> <C> <C>
Value Fund 32.29% 32.59% 9/30/94
.....................................................................
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption that at original purchase.
</TABLE>
6
<PAGE>
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
Unaudited
- ---------------------
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 Months Year 9/30/94
Ended Ended Through
6/30/97 12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of Period $ 15.76 $ 13.21 $ 10.24 $10.00
..............................................
Investment activities
Net investment income 0.11 0.27* 0.27* 0.08*
Net realized and
unrealized gain (loss) 2.57 3.45 3.78 0.23
..............................................
Total from
investment activities 2.68 3.72 4.05 0.31
..............................................
Distributions
Net investment income (0.11) (0.26) (0.26) (0.07)
Net realized gain (0.18) (0.91) (0.82) --
..............................................
Total distributions (0.29) (1.17) (1.08) (0.07)
..............................................
NET ASSET VALUE
End of period $ 18.15 $ 15.76 $ 13.21 $10.24
----------------------------------------------
Ratios/Supplemental Data
Total return 17.18% 28.51%* 39.85%* 3.10%*
................................................................................
Ratio of expenses to
average net assets 1.10%+ 1.10%* 1.10%* 1.10%*+
................................................................................
Ratio of net investment
income to average
net assets 1.47%+ 1.71%* 2.03%* 3.16%*+
................................................................................
Portfolio turnover rate 73.1%+ 68.0% 89.7% 30.8%+
................................................................................
Average commission rate paid $ 0.0422 $ 0.0471 -- --
................................................................................
Net assets, end of period
(in thousands) $345,430 $197,846 $46,582 $8,850
................................................................................
</TABLE>
* Excludes expenses in excess of a 1.10% voluntary expense limitation in effect
through 12/31/96.
+ Annualized.
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1997
<TABLE>
<CAPTION>
- ------------------------
Statement of Net Assets Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Common Stocks 92.4%
FINANCIAL 19.0%
Bank and Trust 5.6%
Bankers Trust New York 30,000 $ 2,610
................................................................................
Dime Bancorp 125,000 2,188
................................................................................
First Mariner Bancorp * 40,000 510
................................................................................
Great Western Financial 50,000 2,688
................................................................................
Mellon Bank 105,000 4,738
................................................................................
Mercantile Bancorporation 50,000 3,037
................................................................................
Signet Banking 100,000 3,600
................................................................................
19,371
.............
Insurance 10.3%
ACE Limited 40,000 2,955
................................................................................
Chubb 50,000 3,344
................................................................................
EXEL 100,000 5,275
................................................................................
Hilb, Rogal and Hamilton 125,000 2,125
................................................................................
LaSalle Re Holdings 57,000 1,682
................................................................................
Mid Ocean Limited 80,000 4,195
................................................................................
Nationwide Financial Services (Class A) 100,000 2,656
................................................................................
St. Paul Companies 50,000 3,812
................................................................................
Transamerica 35,000 3,275
................................................................................
W. R. Berkley 60,000 3,510
................................................................................
Willis-Corroon ADR 250,000 2,797
................................................................................
35,626
.............
Financial Services 3.1%
ADVANTA (Class B) 120,000 4,267
................................................................................
H&R Block 100,000 3,225
................................................................................
John Nuveen 100,000 3,125
................................................................................
10,617
.............
Total Financial 65,614
.............
UTILITIES 4.9%
Telephone Services 2.7%
360 Communications * 200,000 3,425
................................................................................
AT&T 50,000 1,753
................................................................................
</TABLE>
8
<PAGE>
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Frontier 110,000 $ 2,193
................................................................................
Telephone and Data Systems 50,000 1,900
................................................................................
9,271
.............
Electric Utilities 2.2%
Centerior Energy 150,000 1,678
................................................................................
New York State Electric & Gas 70,000 1,461
................................................................................
Ohio Edison 70,000 1,527
................................................................................
Unicom 125,000 2,782
................................................................................
7,448
.............
Total Utilities 16,719
.............
CONSUMER NONDURABLES 16.8%
Beverages 1.4%
Allied Domecq PLC (GBP) 400,000 2,878
................................................................................
Brown-Forman (Class B) 40,000 1,952
................................................................................
4,830
.............
Food Processing 2.0%
McCormick 100,000 2,531
................................................................................
Whitman 175,000 4,430
................................................................................
6,961
.............
Health Care Services 0.9%
PacifiCare Health Systems (Class B) * 50,000 3,192
................................................................................
3,192
.............
Hospital Supplies/Hospital Management 4.4%
Allergan 140,000 4,454
................................................................................
Bausch & Lomb 75,000 3,534
................................................................................
Smith & Nephew (GBP) 1,500,000 4,172
................................................................................
St. Jude Medical * 75,000 2,925
................................................................................
15,085
.............
Pharmaceuticals 0.6%
IDEXX Laboratories * 175,000 2,171
................................................................................
2,171
.............
Miscellaneous Consumer Products 7.5%
Fortune Brands 40,000 1,492
................................................................................
Gallaher Group PLC ADR * 40,000 738
................................................................................
Mattel 75,000 2,541
................................................................................
National Presto 60,000 2,419
................................................................................
</TABLE>
9
<PAGE>
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Reebok 75,000 $ 3,506
................................................................................
RJR Nabisco 125,000 4,125
................................................................................
Seagram 30,000 1,207
................................................................................
Stanley Works 60,000 2,400
................................................................................
Tambrands 58,500 2,918
................................................................................
Tomkins (GBP) 1,000,000 4,363
................................................................................
25,709
.............
Total Consumer Nondurables 57,948
.............
CONSUMER SERVICES 15.5%
General Merchandisers 3.0%
Mercantile Stores 70,000 4,406
................................................................................
Neiman Marcus * 101,000 2,651
................................................................................
Wal-Mart 100,000 3,381
................................................................................
10,438
.............
Specialty Merchandisers 2.7%
Lillian Vernon 120,000 2,025
................................................................................
The Limited 125,000 2,531
................................................................................
Toys "R" Us * 140,000 4,900
................................................................................
9,456
.............
Entertainment and Leisure 5.0%
Harrah's Entertainment * 175,000 3,194
................................................................................
ITT * 90,000 5,496
................................................................................
Mirage Resorts * 75,000 1,894
................................................................................
Outback Steakhouse * 150,000 3,623
................................................................................
Viacom (Class B) * 100,000 3,000
................................................................................
17,207
.............
Media and Communications 4.8%
Chris-Craft 56,650 2,733
................................................................................
Comcast (Class A) 125,000 2,617
................................................................................
Dun & Bradstreet 75,000 1,969
................................................................................
Scholastic * 80,000 2,798
................................................................................
Time Warner 70,000 3,377
................................................................................
Valassis Communications * 125,000 3,000
................................................................................
16,494
.............
Total Consumer Services 53,595
.............
</TABLE>
10
<PAGE>
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
CONSUMER CYCLICALS 4.7%
Building and Real Estate 1.1%
Owens Corning 90,000 $ 3,881
................................................................................
3,881
.............
Miscellaneous Consumer Durables 2.9%
Imation * 125,000 3,297
................................................................................
Polaroid 60,000 3,330
................................................................................
Tandy 60,000 3,360
................................................................................
9,987
.............
Auto Related 0.7%
Bandag 50,000 2,450
................................................................................
2,450
.............
Total Consumer Cyclicals 16,318
.............
TECHNOLOGY 3.3%
Aerospace and Defense 2.3%
Allegheny Teledyne 80,000 2,160
................................................................................
General Dynamics 50,000 3,750
................................................................................
Raytheon 40,000 2,040
................................................................................
7,950
.............
Specialized Computer 1.0%
Digital Equipment * 100,000 3,544
................................................................................
3,544
.............
Total Technology 11,494
.............
CAPITAL EQUIPMENT 5.9%
Electrical Equipment 1.4%
Westinghouse 200,000 4,625
................................................................................
4,625
.............
Machinery 4.5%
Aeroquip-Vickers 75,000 3,544
................................................................................
Farrel 25,000 86
................................................................................
FMC * 60,000 4,766
................................................................................
NCR * 100,000 2,975
................................................................................
TriMas 148,700 4,182
................................................................................
15,553
.............
Total Capital Equipment 20,178
.............
</TABLE>
11
<PAGE>
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
BUSINESS SERVICES AND TRANSPORTATION 5.0%
Computer Service and Software 1.6%
Broderbund Software * 100,000 $ 2,475
................................................................................
Intuit * 140,000 3,207
................................................................................
5,682
.............
Miscellaneous Business Services 2.1%
Corporate Express * 200,000 2,881
................................................................................
Wheelabrator Technologies 275,000 4,245
................................................................................
7,126
.............
Railroads 1.3%
Burlington Northern Santa Fe 50,000 4,494
................................................................................
4,494
.............
Total Business Services and Transportation 17,302
.............
ENERGY 4.3%
Energy Services 1.1%
Witco 100,000 3,794
................................................................................
3,794
.............
Integrated Petroleum - Domestic 2.5%
Amerada Hess 100,000 5,556
................................................................................
Union Texas Petroleum 150,000 3,141
................................................................................
8,697
.............
Exploration and Production 0.7%
Union Pacific Resources 100,000 2,487
................................................................................
2,487
.............
Total Energy 14,978
.............
PROCESS INDUSTRIES 9.9%
Diversified Chemicals 2.3%
Dow Chemical 40,000 3,485
................................................................................
Hercules 90,000 4,309
................................................................................
7,794
.............
Specialty Chemicals 3.7%
Georgia Gulf 65,000 1,889
................................................................................
Great Lakes Chemical 75,000 3,928
................................................................................
Mallinkrodt 90,000 3,420
................................................................................
</TABLE>
12
<PAGE>
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Millennium Chemicals 150,000 $ 3,413
................................................................................
12,650
.............
Paper and Paper Products 1.5%
Champion International 45,000 2,486
................................................................................
Consolidated Papers 50,000 2,700
................................................................................
5,186
.............
Forest Products 2.4%
Boise Cascade 70,000 2,472
................................................................................
Louisiana Pacific 120,000 2,535
................................................................................
Potlatch 30,000 1,357
................................................................................
Rayonier 50,000 2,103
................................................................................
8,467
.............
Total Process Industries 34,097
.............
BASIC MATERIALS 3.1%
Metals 0.6%
Reynolds Metals 30,000 2,137
................................................................................
2,137
.............
Mining 2.5%
Homestake Mining 125,000 1,633
................................................................................
LONRHO (GBP) 200,000 423
................................................................................
Newmont Mining 169,000 6,591
................................................................................
8,647
.............
Total Basic Materials 10,784
.............
Total Common Stocks (Cost $276,100) 319,027
.............
Short-Term Investments 10.1%
Certificates of Deposit 2.3%
Societe Generale, 5.92%, 9/17/97 $ 2,000,000 2,001
................................................................................
Svenska Handlesbanken, 5.68 - 5.705%
7/7 - 10/1/97 4,000,000 4,000
................................................................................
World Savings Bank, 5.57%, 7/8/97 2,000,000 2,000
................................................................................
8,001
.............
Commercial Paper 7.8%
Delaware Funding, 4(2), 5.55%, 7/15/97 3,000,000 2,994
................................................................................
Dover Funding, 4(2), 5.55%, 7/21/97 3,000,000 2,991
................................................................................
Falcon Asset Securitization, 4(2), 5.58%,
8/18/97 2,000,000 1,985
</TABLE>
13
<PAGE>
T. Rowe Price Value Fund
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
- ------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Finova Capital, 5.62%, 7/24/97 $ 2,000,000 $ 1,993
..............................................................................
Ford Credit Europe, 5.57%, 7/14/97 3,000,000 2,994
..............................................................................
Golden Managers Acceptance, 5.56%, 7/10/97 2,000,000 1,997
..............................................................................
Market Street Funding, 5.60%, 8/13/97 3,000,000 2,980
..............................................................................
Merrill Lynch, 5.57%, 8/20/97 2,000,000 1,985
..............................................................................
Preferred Receivables Funding, 5.55%,
7/17 - 7/29/97 4,000,000 3,986
..............................................................................
Investments in Commercial Paper through a
Joint Account 6.05 - 6.20%, 7/1/97 3,025,290 3,025
..............................................................................
26,930
...........
Total Short-Term Investments (Cost $34,931) 34,931
...........
Total Investments in Securities
102.5% of Net Assets (Cost $311,031) $ 353,958
Other Assets Less Liabilities (8,528)
...........
NET ASSETS $ 345,430
-----------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 170
Accumulated net realized gain/loss - net of distributions 16,171
Net unrealized gain (loss) 42,927
Paid-in-capital applicable to 19,035,824 shares of $0.0001 par
value capital stock outstanding; 1,000,000,000 shares authorized $ 286,162
...........
NET ASSETS 345,430
-----------
NET ASSET VALUE PER SHARE $ 18.15
-----------
</TABLE>
* Non-income producing
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."
GBP British sterling
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
Unaudited
- -----------------------
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months
Ended
6/30/97
Investment Income
<S> <C>
Income
Dividend $ 2,642
Interest 669
.............
Total income 3,311
.............
Expenses
Investment management 932
Shareholder servicing 298
Registration 46
Prospectus and shareholder reports 45
Custody and accounting 44
Legal and audit 7
Directors 3
Miscellaneous 8
Reimbursed to manager 35
.............
Total expenses 1,418
.............
Net investment income 1,893
.............
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 16,193
Foreign currency transactions (30)
.............
Net realized gain (loss) 16,163
.............
Net unrealized gain (loss)
Securities 25,889
Other assets and liabilities
denominated in foreign currencies 1
.............
Change in net unrealized gain or loss 25,890
.............
Net realized and unrealized gain (loss) 42,053
.............
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 43,946
.............
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
Unaudited
- ----------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
6/30/97 12/31/96
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ 1,893 $ 1,977
Net realized gain (loss) 16,163 12,131
Change in net unrealized gain or loss 25,890 13,510
............................
Increase (decrease) in net assets from operations 43,946 27,618
............................
Distributions to shareholders
Net investment income (1,877) (2,279)
Net realized gain (2,810) (9,734)
............................
Decrease in net assets from distributions (4,687) (12,013)
............................
Capital share transactions *
Shares sold 164,198 163,452
Distributions reinvested 4,502 11,582
Shares redeemed (60,529) (39,776)
............................
Increase (decrease) in net assets from capital
share transactions 108,171 135,258
............................
Net equalization 154 401
............................
Net Assets
Increase (decrease) during period 147,584 151,264
Beginning of period 197,846 46,582
............................
End of period $ 345,430 $ 197,846
----------------------------
*Share information
Shares sold 9,925 10,964
Distributions reinvested 270 744
Shares redeemed (3,713) (2,680)
............................
Increase (decrease) in shares outstanding 6,482 9,028
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
Unaudited June 30, 1997
- -----------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price 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 September 30, 1994.
Valuation Equity securities are valued at the last quoted sales price on the
day the valuations are made. A security which is listed or traded on more than
one exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Listed securities not traded on a particular
day and securities regularly traded in the over-the-counter market are valued at
the mean of the latest bid and asked prices.
Short-term debt securities are valued at amortized 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.
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.
Premiums and Discounts Premiums and discounts on debt securities are amortized
for both financial reporting and tax purposes.
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
17
<PAGE>
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
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
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 securities, aggregated $187,185,000 and $87,365,000, respectively,
for the six months ended June 30, 1997.
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, 1997, the aggregate cost of investments for federal income tax and
financial reporting purposes was $311,031,000, and net unrealized gain
aggregated $42,927,000, of which $45,586,000 related to appreciated investments
and $2,659,000 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 $210,000 was payable at June 30, 1997. 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 0.30% for assets in excess of $80
billion. At
18
<PAGE>
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
June 30, 1997, and for the six months then ended, the effective annual group fee
rate was 0.33%. The fund pays a pro-rata share of the group fee based on the
ratio of its net assets to those of the group.
Pursuant to a previous investment management agreement, $97,000 of unaccrued
1994-1996 fees and expenses were repaid during the six months ended June 30,
1997, and $140,000 remains subject to reimbursement through December 31, 1998.
the fund is required to reimburse the manager for these expenses provided that
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%.
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 $270,000 for the six months
ended June 30, 1997, of which $47,000 was payable at period-end.
19
<PAGE>
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
Investment Services And Information
KNOWLEDGEABLE SERVICE REPRESENTATIVES
By Phone 1-800-225-5132 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.
In Person Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
Checking Available on most fixed income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your distributions.
Automated 24-Hour Services Including Tele*Access(R) and T. Rowe Price OnLine.
DISCOUNT BROKERAGE*
Individual Investments Stocks, bonds, options, precious metals, and other
securities at a savings over regular commission rates.
INVESTMENT INFORMATION
Combined Statement Overview of your T. Rowe Price accounts.
Shareholder Reports Fund managers' reviews of their strategies and results.
T. Rowe Price Report Quarterly investment newsletter discussing markets and
financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
*A division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC.
20
<PAGE>
T. Rowe Price Mutual Funds
- --------------------------------------------------------------------------------
STOCK FUNDS
..................................
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Science & Technology
Small-Cap Stock**
Small-Cap Value*
Spectrum Growth
Value
International/Global
Emerging Markets Stock
European Stock
Global Stock
International Discovery
International Stock
Japan
Latin America
New Asia
Spectrum International
BOND FUNDS
..................................
Domestic Taxable
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Short-Term U.S. Government
Spectrum Income
Summit GNMA
Summit Limited-Term Bond
U.S. Treasury Intermediate
U.S. Treasury Long-Term
Domestic Tax-Free
California Tax-Free Bond
Florida Insured
Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term
Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal
Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term
Tax-Free Bond
Virginia Tax-Free Bond
..................................
International/Global
Global Government Bond
Emerging Markets Bond
International Bond
MONEY MARKET FUNDS
..................................
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
..................................
Balanced
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD
VARIABLE ANNUITY
..................................
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced
Portfolio
Prime Reserve Portfolio
*Closed to new investors.
**Formerly the OTC Fund.
Please call for a prospectus. Read it carefully before you invest or send money.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY.
T. Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
21
<PAGE>
For yield, price, last transaction, current balance, or to conduct transactions,
24 hours, 7 days a week, call Tele*Access(R):
1-800-638-2587 toll free
For assistance with your existing fund account, call:
Shareholder Service Center 1-800-225-5132 toll free 410-625-6500 Baltimore area
To open a Discount Brokerage account or obtain information, call:
1-800-638-5660 toll free
Internet address:
www.troweprice.com
T. Rowe Price Associates
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.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor.
