<PAGE>
Semiannual Report
VALUE
FUND
---------------
JUNE 30, 1998
---------------
[LOGO OF T. ROWE PRICE APPEARS HERE]
<PAGE>
Report Highlights
------------------------------------------------------------------------------
Value Fund
. Stocks continued their strong performance over the first half, but the
environment grew challenging for value funds.
. Large-cap growth stocks with high valuations posted the strongest gains, while
value stocks were generally out of favor.
. Fund results trailed the S&P 500 and the Lipper average for the 6- and 12-
month periods ended June 30, as several key holdings did not perform well.
. While we are disappointed with short-term results, performance since the
fund's inception has been strong, and our investment approach should continue
to benefit shareholders over time.
. We still believe that the powerful stock market returns of recent years are
likely to moderate, and we will continue to seek sound investments as
opportunities arise.
<PAGE>
FELLOW SHAREHOLDERS
The equity market performed very well in the first half of 1998 as low
inflation, a benign interest rate environment, and generally healthy corporate
earnings provided fuel for the advance. As the first half progressed and signs
of a slowdown in economic growth appeared, the environment grew increasingly
challenging for value funds such as yours.
------------------------
PERFORMANCE COMPARISON
---------------------------------------------------------------------------
Periods Ended 6/30/98 6 Months 12 Months
--------------------------------------------------------------------------
Value Fund 8.52% 19.69%
..........................................................................
S&P 500 17.71 30.16
..........................................................................
Lipper Growth & Income
Funds Average 12.11 22.86
..........................................................................
Since your fund's birth on September 30, 1994, value investing has
been an extremely rewarding strategy. The fund generated an average
annual return of 29.02% over this period and 26.88% for the three
years ended June 30, 1998, compared with 24.74% for its Lipper peer
group average. However, the first six months of 1998 were
disappointing, as the fund lagged both the Lipper Growth & Income
Funds Average and the S&P 500. Growth and income funds generally had
difficulty keeping up with the broad market advance, and our
shortfall relative to the Lipper benchmark was attributable to
several factors, which we will discuss in detail.
DIVIDEND DISTRIBUTIONS
Your Board of Trustees declared a second quarter income dividend of
$0.05 per share, bringing your 1998 income distribution total to
$0.09 per share. This distribution was paid on June 29 to
shareholders of record on June 25. You should have already received
your check or statement reflecting the second quarter dividend.
PORTFOLIO REVIEW
We emphasize investments in companies we determine to be undervalued
in terms of price/earnings, price/cash flow, and price/asset ratios,
1
<PAGE>
- ------------------------
Sector Diversification
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Consumer Nondurables 18%
Financial 15%
Consumer Services 14%
Technology 12%
Energy 10%
Process Industry 8%
Business Services and Transportation 6%
Others and Reserves 17%
Based on net assets as of 6/30/98.
replacement value calculations, or other analytical frameworks. Many of our
holdings are contrarian in nature, since we purchase shares of companies
that have been out of favor and undervalued, in our view, in the
marketplace. We believe companies meeting our criteria provide an
attractive combination of limited downside risk and reasonable upside
potential.
During the first half of the year, our value approach to investing did not
work as well as in the past. Why? In terms of "sins of omission," companies
we did not own would have made better investments, in many cases. The
market was led by fine companies with strong earnings growth but with
higher price/earnings multiples than are appropriate in a value fund. In
brief, the types of stocks that powered the broad market were not those
that met our criteria for attractive stock price valuations and, therefore,
are unlikely to find their way into the Value Fund.
Regarding "sins of commission," several holdings we viewed as attractive
when we purchased them were disappointing for a variety of reasons.
Portfolio stocks such as Loews, Polaroid, RJR Nabisco, and Union Pacific
were notable underperformers in the first half. The combination of not
being able to acquire many of the companies that led the market advance,
and owning a handful of stocks with company-specific disappointments, was
the primary reason your fund trailed its Lipper benchmark.
However, several positions did work out well. Two companies cited in our
year-end report, United States Surgical and Waste Management, are being
acquired by other firms at significant premiums to our cost. Several other
holdings, including Union Texas Petroleum and 360 Communications, were also
taken over at prices higher than our cost basis. As far as portfolio
changes are concerned, the largest sales were of companies in which we
accomplished our original mission to generate good risk-adjusted returns by
investing in companies we felt were undervalued in the marketplace. New
purchases so far in 1998
2
<PAGE>
include Toys "R" Us, Motorola, Phelps Dodge, and Amoco, companies whose
shares were selling at attractive valuations, according to our criteria,
and offer good potential for price gains over the next 12 months or longer.
SUMMARY AND OUTLOOK
There will always be periods when growth stocks surpass value stocks, but
we remain confident about the viability of our investment approach, the
appeal of the fund's holdings, and their potential to provide good results
over the long term.
As mentioned in previous reports, we have felt for some time that the stock
market returns of the past few years are unsustainable and should begin to
moderate at some point. After several consecutive years of powerful
returns, the share prices of many companies have been pushed to extended
levels, in our view. However, we are confident that, whatever type of
environment we face, we will be able to find attractively valued investment
opportunities 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 24, 1998
3
<PAGE>
T. Rowe Price Value Fund
- -------------------------------------------------------------------------------
- -----------------------
Portfolio Highlights
- -------------------------------------------------------------------------------
MAJOR PORTFOLIO CHANGES
LISTED IN DESCENDING ORDER OF SIZE
6 Months Ended 6/30/98
Ten Largest Purchases Ten Largest Sales
---------------------------------------------------------------------------
Toys "R" Us * ALCATEL ALSTHOM **
...................................... ...............................
Motorola * Union Texas Petroleum **
...................................... ...............................
Starwood Hotels & Resorts * Allergan **
...................................... ...............................
Phelps Dodge * Black & Decker **
...................................... ...............................
Allegheny Teledyne Burlington Northern Santa Fe **
...................................... ...............................
Amoco * AT&T **
...................................... ...............................
Pennzoil * Intuit **
...................................... ...............................
General Signal * Harris
...................................... ...............................
GM * NIKE **
...................................... ...............................
Browning-Ferris * St. Jude Medical **
...................................... ...............................
* Position added
** Position eliminated
4
<PAGE>
T. Rowe Price Value Fund
- -------------------------------------------------------------------------------
- -----------------------
PORTFOLIO HIGHLIGHTS
- -------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
6/30/98
- -------------------------------------------------------------------------------
Toys "R" Us 1.6%
............................................................................
Loews 1.5
............................................................................
Great Lakes Chemical 1.4
............................................................................
United States Surgical 1.4
............................................................................
Hercules 1.4
----------------------------------------------------------------------------
Amerada Hess 1.4
............................................................................
Starwood Hotels & Resorts 1.3
............................................................................
Fortune Brands 1.3
............................................................................
Amoco 1.3
............................................................................
Allegheny Teledyne 1.3
----------------------------------------------------------------------------
Phelps Dodge 1.3
............................................................................
Union Pacific Resources 1.2
............................................................................
Browning-Ferris 1.2
............................................................................
Raytheon 1.2
............................................................................
Inco 1.1
----------------------------------------------------------------------------
Owens Corning 1.1
............................................................................
Viacom 1.1
............................................................................
GM 1.1
............................................................................
Tupperware 1.1
............................................................................
Norfolk Southern 1.1
----------------------------------------------------------------------------
Champion International 1.1
............................................................................
Hasbro 1.1
............................................................................
First Union 1.1
............................................................................
Burlington Resources 1.1
............................................................................
360 Communications 1.1
----------------------------------------------------------------------------
Total 30.9%
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
---------------------------------------------------------------------------
As of 6/30/98
[LINE GRAPH APPEARS HERE]
S&P 500 Index Value Fund-Line
9/30/94 10,000 10,000
Jun-95 12,019 12,723
Jun-96 15,144 16,413
Jun-97 20,399 21,713
Jun-98 26,552 25,989
- ---------------------------------------
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.
Since Inception
Periods Ended 6/30/98 1 Year 3 Years Inception Date
----------------------------------------------------------------------------
Value Fund 19.69% 26.88% 29.02% 9/30/94
............................................................................
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 Value Fund
- --------------------------------------------------------------------------------
Unaudited
- ----------------------
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 Months Year 9/30/94
Ended Ended Through
6/30/98 12/31/97 12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 18.24 $ 15.76 $ 13.21 $ 10.24 $ 10.00
------------------------------------------------------------------------
Investment activities
Net investment income 0.09 0.21 0.27* 0.27* 0.08*
Net realized and unrealized gain (loss) 1.47 4.31 3.45 3.78 0.23
-------------------------------------------------------------------------
Total from investment activities 1.56 4.52 3.72 4.05 0.31
-------------------------------------------------------------------------
Distributions
Net investment income (0.09) (0.21) (0.26) (0.26) (0.07)
Net realized gain (0.15) (1.83) (0.91) (0.82) -
-------------------------------------------------------------------------
Total distributions (0.24) (2.04) (1.17) (1.08) (0.07)
-------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 19.56 $ 18.24 $ 15.76 $ 13.21 $ 10.24
-------------------------------------------------------------------------
Ratios/Supplemental Data
Total return ++ 8.52% 29.25% 28.51%* 39.85%* 3.10%*
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets 0.98%+ 1.05% 1.10%* 1.10%* 1.10%*+
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment
income to average
net assets 1.02%+ 1.26% 1.71%* 2.03%* 3.16%*+
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 30.7% 67.2% 68.0% 89.7% 30.8%+
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $895,457 $546,375 $197,846 $ 46,582 $8,850
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
++ Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
* 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, 1998
Statement Of Net Assets Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
COMMON STOCKS 95.1%
FINANCIAL 15.0%
Bank and Trust 5.5%
First Chicago NBD 100,000 $ 8,862
.............................................................................
First Union 167,000 9,728
.............................................................................
Mellon Bank 105,000 7,311
.............................................................................
Mercantile Bancorporation 100,000 5,038
.............................................................................
NationsBank 125,000 9,562
.............................................................................
Union Planters 150,000 8,822
.............................................................................
49,323
.............
Insurance 8.7%
EXEL 100,000 7,781
.............................................................................
Loews 150,000 13,069
.............................................................................
Mid Ocean Limited 80,000 6,280
.............................................................................
Ohio Casualty 200,000 8,838
.............................................................................
PartnerRe Holdings 150,000 7,650
.............................................................................
SAFECO 200,000 9,081
.............................................................................
St. Paul Companies 100,000 4,206
.............................................................................
Transamerica 75,000 8,634
.............................................................................
W. R. Berkley 90,000 3,608
.............................................................................
Willis-Corroon ADR 650,000 8,166
.............................................................................
77,313
.............
Financial Services 0.8%
Leucadia National 225,000 7,439
.............................................................................
7,439
.............
Total Financial 134,075
.............
UTILITIES 2.5%
Telephone Services 1.1%
360 Communications * 300,000 9,600
.............................................................................
9,600
.............
Electric Utilities 1.4%
.............................................................................
Niagara Mohawk * 500,000 7,469
.............................................................................
Unicom 150,000 5,259
.............................................................................
12,728
.............
Total Utilities 22,328
.............
8
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
CONSUMER NONDURABLES 17.9%
Beverages 0.6%
Brown-Forman (Class B) 85,000 $ 5,461
.............................................................................
5,461
.............
Food Processing 2.5%
ConAgra 300,000 9,506
.............................................................................
McCormick 220,000 7,858
.............................................................................
Whitman 225,000 5,161
.............................................................................
22,525
.............
Hospital Supplies/Hospital Management 3.0%
Columbia/HCA Healthcare 175,000 5,097
.............................................................................
Oxford Health Plans * 350,000 5,370
.............................................................................
Smith & Nephew (GBP) 1,500,000 3,744
.............................................................................
United States Surgical 275,000 12,547
.............................................................................
26,758
.............
Pharmaceuticals 2.3%
Amgen * 91,300 5,971
.............................................................................
Pharmacia & Upjohn 150,000 6,919
.............................................................................
Teva Pharmaceutical Industries ADR 225,000 7,917
.............................................................................
20,807
.............
Health Care Services 1.5%
Aetna 125,000 9,516
.............................................................................
Medpartners * 450,000 3,600
.............................................................................
13,116
.............
Miscellaneous Consumer Products 8.0%
Armstrong World 125,000 8,422
.............................................................................
Fortune Brands 300,000 11,532
.............................................................................
Hasbro 250,000 9,828
.............................................................................
Reebok * 150,000 4,153
.............................................................................
RJR Nabisco 375,000 8,906
.............................................................................
Rubbermaid 225,000 7,467
.............................................................................
Seagram 225,000 9,211
.............................................................................
Tomkins (GBP) 1,000,000 5,431
.............................................................................
UST 250,000 6,750
.............................................................................
71,700
.............
Total Consumer Nondurables 160,367
.............
9
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
CONSUMER SERVICES 13.2%
Restaurants 0.9%
Tricon Global Restaurants * 250,000 $ 7,922
.............................................................................
7,922
.............
General Merchandisers 1.6%
.............................................................................
Dillards (Class A) 175,000 7,252
.............................................................................
Neiman-Marcus * 175,000 7,601
.............................................................................
14,853
..............
Specialty Merchandisers 3.1%
American Stores 150,000 3,628
.............................................................................
Toys "R" Us * 600,000 14,138
.............................................................................
Tupperware 350,000 9,844
.............................................................................
27,610
..............
Entertainment and Leisure 4.5%
.............................................................................
Circus Circus * 400,000 6,775
.............................................................................
Harrah's Entertainment * 235,500 5,475
.............................................................................
Hilton 261,600 7,456
.............................................................................
Hutchison Whampoa (HKD) 796,100 4,202
.............................................................................
Reader's Digest (Class A) 225,000 6,103
.............................................................................
Viacom (Class B) * 175,000 10,194
.............................................................................
40,205
..............
Media and Communications 3.1%
CBS 200,000 6,350
.............................................................................
Chris-Craft * 123,600 6,759
.............................................................................
News Corporation 200,000 6,425
.............................................................................
Valassis Communications * 220,000 8,484
.............................................................................
28,018
..............
Total Consumer Services 118,608
..............
CONSUMER CYCLICALS 5.2%
Automobiles and Related 1.1%
GM 150,000 10,022
.............................................................................
10,022
..............
Building and Real Estate 2.5%
Owens Corning 250,000 10,203
.............................................................................
Starwood Hotels & Resorts, REIT 250,000 12,078
.............................................................................
22,281
..............
10
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Miscellaneous Consumer Durables 1.6%
Eastman Kodak 75,000 $ 5,480
.............................................................................
Imation * 200,000 3,313
.............................................................................
Polaroid 150,000 5,334
.............................................................................
14,127
.............
Total Consumer Cyclicals 46,430
.............
TECHNOLOGY 11.7%
Electronic Components 2.3%
Analog Devices * 250,000 6,141
.............................................................................
Motorola 175,000 9,198
.............................................................................
Texas Instruments 100,000 5,831
.............................................................................
21,170
.............
Electronic Systems 2.0%
General Signal 250,000 9,000
.............................................................................
Hewlett-Packard 150,000 8,981
.............................................................................
17,981
.............
Telecommunications Equipment 2.2%
3Com * 250,000 7,680
.............................................................................
Harris 150,000 6,703
.............................................................................
Telebras ADR 46,800 5,110
.............................................................................
19,493
.............
Aerospace and Defense 5.2%
Allegheny Teledyne 500,000 11,438
.............................................................................
AlliedSignal 200,000 8,875
.............................................................................
Boeing 175,000 7,798
.............................................................................
Lockheed Martin 75,000 7,941
.............................................................................
Raytheon (Class B) 175,000 10,347
.............................................................................
46,399
.............
Total Technology 105,043
.............
CAPITAL EQUIPMENT 0.8%
Machinery 0.8%
FMC * 100,000 6,819
.............................................................................
Total Capital Equipment 6,819
11
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
BUSINESS SERVICES AND
TRANSPORTATION 5.9%
Computer Service and Software 1.5%
First Data 200,000 $ 6,663
................................................................................
NCR * 200,000 6,500
................................................................................
13,163
............
Miscellaneous Business Services 2.6%
Browning-Ferris 300,000 10,425
................................................................................
H&R Block 100,000 4,212
................................................................................
Waste Management 250,000 8,750
................................................................................
23,387
............
Railroads 1.8%
Norfolk Southern 330,000 9,838
................................................................................
Union Pacific 150,000 6,619
................................................................................
16,457
............
Total Business Services and Transportation 53,007
............
ENERGY 9.5%
Energy Services 0.7%
Witco 200,000 5,850
................................................................................
5,850
............
Exploration and Production 3.3%
Burlington Resources 225,000 9,689
................................................................................
Pioneer Natural Resources 400,000 9,550
................................................................................
Union Pacific Resources 600,000 10,538
................................................................................
29,777
............
Integrated Petroleum - Domestic 4.2%
Amerada Hess 225,000 12,220
................................................................................
Murphy Oil 175,000 8,870
................................................................................
Occidental Petroleum 300,000 8,100
................................................................................
Pennzoil 175,000 8,860
................................................................................
38,050
............
Integrated Petroleum - International 1.3%
Amoco 275,000 11,447
................................................................................
11,447
............
Total Energy 85,124
............
12
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
PROCESS INDUSTRIES 8.3%
Diversified Chemicals 2.3%
Hercules 300,000 $ 12,337
................................................................................
Union Carbide 160,000 8,540
................................................................................
20,877
.............
Specialty Chemicals 2.2%
Betz Laboratories 150,000 6,206
................................................................................
Great Lakes Chemical 325,000 12,817
................................................................................
Octel * 50,000 994
................................................................................
20,017
.............
Paper and Paper Products 2.5%
Champion International 200,000 9,838
................................................................................
Kimberly-Clark 150,000 6,881
................................................................................
Mead 175,000 5,556
................................................................................
22,275
.............
Forest Products 1.3%
Georgia-Pacific 125,000 7,367
................................................................................
Macmillan Bloedel 400,000 4,288
................................................................................
11,655
.............
Total Process Industries 74,824
.............
BASIC MATERIALS 4.1%
Metals 2.4%
Inco 750,000 10,219
................................................................................
Phelps Dodge 200,000 11,437
................................................................................
21,656
.............
Mining 1.7%
Newmont Mining 375,000 8,859
................................................................................
WMC (AUD) 2,000,000 6,034
................................................................................
14,893
.............
Total Basic Materials 36,549
.............
Miscellaneous Common Stock 1.0% 8,946
.............
Total Common Stocks (Cost $805,208) 852,120
.............
13
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------------
In thousands
<S> <C> <C>
SHORT-TERM INVESTMENTS 3.6%
Money Market Funds 3.6%
Reserve Investment Fund, 5.69% # 32,115,997 $ 32,116
...........................................................................................
Total Short-Term Investments (Cost $32,116) 32,116
.............
Total Investments in Securities
98.7% of Net Assets (Cost $837,324) $ 884,236
Other Assets Less Liabilities 11,221
.............
NET ASSETS $ 895,457
-------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 152
Accumulated net realized gain/loss - net of distributions 45,008
Net unrealized gain (loss) 46,917
Paid-in-capital applicable to 45,780,022 shares of $0.0001 par
value capital stock outstanding; 1,000,000,000 shares authorized 803,380
.............
NET ASSETS $ 895,457
-------------
NET ASSET VALUE PER SHARE $ 19.56
-------------
</TABLE>
# Seven-day yield
* Non-income producing
ADR American Depository Receipt
REIT Real Estate Investment Trust
AUD Australian dollar
GBP British sterling
HKD Hong Kong dollar
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
Unaudited
- -------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/98
Investment Income
Income
Dividend $ 5,756
Interest 1,822
.............
Total income 7,578
.............
Expenses
Investment management 2,533
Shareholder servicing 891
Registration 149
Prospectus and shareholder reports 59
Custody and accounting 50
Legal and audit 7
Directors 4
Miscellaneous 31
.............
Total expenses 3,724
.............
Net investment income 3,854
.............
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 44,640
Foreign currency transactions (110)
.............
Net realized gain (loss) 44,530
.............
Change in net unrealized gain or loss
Securities 783
Other assets and liabilities
denominated in foreign currencies 8
.............
Change in net unrealized gain or loss 791
.............
Net realized and unrealized gain (loss) 45,321
.............
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 49,175
------------
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
6 Months Year
Ended Ended
6/30/98 12/31/97
Increase (Decrease) in Net Assets
Operations
Net investment income $ 3,854 $ 4,492
Net realized gain (loss) 44,530 50,739
Change in net unrealized gain or loss 791 29,089
...........................
Increase (decrease) in net assets from
operations 49,175 84,320
...........................
Distributions to shareholders
Net investment income (3,832) (4,372)
Net realized gain (5,800) (47,279)
...........................
Decrease in net assets from distributions (9,632) (51,651)
...........................
Capital share transactions *
Shares sold 427,830 395,564
Distributions reinvested 9,267 50,164
Shares redeemed (127,558) (129,868)
...........................
Increase (decrease) in net assets from capital
share transactions 309,539 315,860
...........................
Net Assets
Increase (decrease) during period 349,082 348,529
Beginning of period 546,375 197,846
...........................
End of period $ 895,457 $ 546,375
---------------------------
* Share information
Shares sold 21,908 21,897
Distributions reinvested 462 2,810
Shares redeemed (6,540) (7,310)
...........................
Increase (decrease) in shares outstanding 15,830 17,397
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
Unaudited June 30, 1998
- ---------------------------------
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.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
Valuation Equity securities listed or regularly traded on a securities
exchange 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. 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.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
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.
17
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T. ROWE PRICE VALUE FUND
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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.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $523,269,000 and $214,793,000, respectively, for the
six months ended June 30, 1998.
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, 1998, the aggregate cost of investments for federal income tax
and financial reporting purposes was $837,324,000, and net unrealized gain
aggregated $46,912,000, of which $92,859,000 related to appreciated
investments and $45,947,000 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 $489,000 was payable at June 30, 1998. 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 June 30, 1998, and for the six months then ended,
the effective annual group fee rate was 0.32%. The fund pays a pro-rata
share of the group fee based on the ratio of its net assets to those of the
group.
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T. ROWE PRICE VALUE FUND
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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 $763,000 for the six months ended June 30, 1998, of which
$132,000 was payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve
Funds are offered as cash management options only to mutual funds and other
accounts managed by T. Rowe Price and its affiliates and are not available
to the public. The Reserve Funds pay no investment management fees.
Distributions from the Reserve Funds to the fund for the six months ended
June 30, 1998, totaled $1,816,000 and are reflected as interest income in
the accompanying Statement of Operations.
During the six months ended June 30, 1998, the fund, in the ordinary course
of business, placed security purchase and sale orders aggregating
$3,067,000 with certain affiliates of the manager and paid commissions of
$15,000 related thereto.
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 the T. Rowe
Price Web site on the Internet. Address: www.troweprice.com
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 all your accounts with T. Rowe Price.
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
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STOCK FUNDS
................................................................................
Domestic
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500*
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
Health Sciences
Media & Telecommunications**
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons***
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value***
Spectrum Growth
Total Equity Market Index
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
Emerging Markets Bond
Global 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 Balanced
Personal Strategy Growth
Personal Strategy Income
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
* Formerly named Equity Index.
** Formerly the closed-end New Age Media Fund. Converted to open-end status on
7/28/97.
*** Closed to new investors.
+ Formerly named Global Government Bond.
++ Neither the funds nor their share prices are insured or guaranteed by the
U.S. government.
Please call for a prospectus. Read it carefully before investing.
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, Investor Centers:
current balance, or to conduct 101 East Lombard St.
transactions, 24 hours, 7 days Baltimore, MD 21202
a week, call Tele*Access/R/:
1-800-638-2587 toll free T. Rowe Price
Financial Center
For assistance 10090 Red Run Blvd.
with your existing Owings Mills, MD 21117
fund account, call:
Shareholder Service Center Farragut Square
1-800-225-5132 toll free 900 17th Street, N.W.
410-625-6500 Baltimore area Washington, D.C. 20006
To open a Discount Brokerage ARCO Tower
account or obtain information, 31st Floor
call: 1-800-638-5660 toll free 515 South Flower St.
Los Angeles, CA 90071
Internet address:
www.troweprice.com 4200 West Cypress St.
10th Floor
T. Rowe Price Associates Tampa, FL 33607
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.
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor. F07-051 6/30/98
