<PAGE>
Annual Report
VALUE
FUND
-----------------
DECEMBER 31, 1999
-----------------
[LOGO OF T.ROWE PRICE]
<PAGE>
REPORT HIGHLIGHTS
---------------------------------------------------------------------------
Value Fund
. The S&P 500 soared to its fifth straight year of returns above 20%, but
more stocks declined than advanced in a frustrating year for value stocks
and your fund.
. Fund performance faded in the second half after outperforming the S&P 500
and the Lipper average in the first half; results surpassed Lipper for the
year.
. Rising interest rates and a focus on technology hurt conservative invest-
ments such as low P/E and high-dividend stocks.
. Despite the sluggish performance, the portfolio contained its share of win-
ners, and we added several new positions.
. While the broad market looks frothy, we are optimistic about value stocks,
many of which are at their lowest valuation levels in 25 years.
UPDATES AVAILABLE
For updates on T. Rowe Price funds following the end of each calendar quarter,
please see our Web site at www.troweprice.com.
<PAGE>
FELLOW SHAREHOLDERS
The last year of the millennium will be remembered as the year the S&P 500
continued an unprecedented five-year streak of returns in excess of 20%, but
also the year in which more S&P 500 stocks declined than advanced. Without doubt
it was a challenging year for value investors in general and for your fund in
particular, as investors shunned our segment of the market in favor of
technology and growth stocks.
- ----------------------
PERFORMANCE COMPARISON
- -------------------------------------------------------------------
Periods Ended 12/31/99 6 Months 12 Months
- -------------------------------------------------------------------
Value Fund -8.76% 9.16%
S&P 500 7.71 21.04
Lipper Multi-Cap Value Funds Average -2.64 7.78
Stocks were strong through the first six months of the year as many shares,
particularly those with value and cyclical characteristics, did quite well. At
mid-year the fund was well ahead of the S&P 500 and the Lipper universe of
comparably managed funds. However, during the second half of 1999, we struggled
relative to the broad market and ended with a total return of 9.16%. The second
half proved to be rough sledding for many funds in our new Lipper category,
which we are introducing in this report. Previously, Lipper assigned a fund to a
category based on its objective as outlined in the prospectus. The new
categories are based on the major characteristics of each fund's actual
portfolio holdings, such as market capitalization, price/earnings and other
valuation ratios, earnings growth rates, etc. As you check the results in the
Performance Comparison table you will notice a significant gap between value
funds generally and the S&P 500. We will comment further on this issue later in
the report. We were pleased that in a poor year for value stocks, we fared
reasonably well against our peer group.
DIVIDEND DISTRIBUTIONS
On December 14, 1999, your Board of Directors declared a fourth quarter income
dividend of $0.06, bringing the total for 1999 to $0.21. On the same day, a
$1.44 capital gain distribution was declared of which $0.76 was short term and
$0.68 long term. The
1
<PAGE>
dividend and capital gain distributions were paid on December 16 to shareholders
of record on December 14. You should have received your check or statement
reflecting them as well as Form 1099-DIV summarizing this information for 1999
tax purposes.
PORTFOLIO REVIEW
The year was characterized by a pronounced investor preference for growth
stocks, a market dominated by a relatively small number of companies, and an
extremely strong advance for one sector--technology. Behind the scenes of the
equity market, different investment styles moved in and out of favor during the
course of the year. While value stocks fared well through June, particularly in
the second quarter, growth stocks led the way in the second half. Technology
stocks made a major impact as the sector almost doubled in value during the
year. We would not normally expect to hold large positions in many of these
companies since they are generally overvalued and, therefore, do not possess the
value criteria we look for. That said, our underweighting in this area detracted
from our relative performance in the second half. It is hard to imagine that in
the context of such strong stock market performance, more than half of the
stocks in the S&P 500 declined in value while the rest advanced, significantly
in some cases. In terms of market breadth, some of the most highly valued
companies provided a disproportionate amount of the S&P 500's return, with only
seven companies accounting for half of the S&P's 21% return last year.
Value investing was rendered even more challenging by the deteriorating interest
rate environment. As fixed income investors can testify, bond returns were
mostly negative as interest rates rose throughout the year. Rising rates took
their toll on the value sector as well. Stocks with low price/earnings ratios
and high dividend yields suffered in 1999, and the S&P 500 stocks with the
lowest P/Es and highest yields generally lost value. This phenomenon was
especially pronounced during the past six months. However, every cloud has a
silver lining. Many stocks with lower-than-average price/earnings ratios, low
price/cash flow ratios, and other attractive measures of value currently sell at
the largest discount to the general market in 25 years.
In this context, the Value Fund performed about as one might have expected. The
entire universe of value funds struggled, with larger-cap funds generally doing
better than mid-and smaller-cap funds. Nonetheless, our portfolio did contain
several successful holdings, including some that were involved in mergers and
acquisitions.
2
<PAGE>
Cyprus Amax, Sprint, and US West made positive contributions, as did some of our
more cyclical companies such as Phelps Dodge, Inco, and Micron Technology. The
financial sector was mixed, but in our view it offers good relative value going
forward. During the past six months, we initiated positions in Sprint, American
Home Products, NIKE, Dana, and other companies, and eliminated Browning-Ferris,
Micron Technology, Motorola, and General Mills among others. Our new positions
are undervalued relative to their earnings power, cash flow, or underlying asset
value. The market often discounts the stock prices of companies facing
short-term difficulties, and it is our job to attempt to capitalize on such
opportunities. Most of the companies eliminated from the portfolio had
appreciated to levels that reduced their valuation appeal. Several sales
involved companies that had been acquired by others.
- ----------------------
SECTOR DIVERSIFICATION
- -----------------------------------------
[PIE CHART]
Reserves and Other 20%
Energy 6%
Process Industries 9%
Business Services and Transportation 7%
Consumer Nondurables 15%
Financial 18%
Consumer Services 16%
Technology 9%
Based on net assets as of 12/31/99
Financial stocks composed 18% of portfolio assets at the end of December, down
from 21% six months earlier. Consumer services rose two percentage points to
16%, consumer nondurables rose one percentage point to 15%, and technology
shares declined from 11% to 9% during the six-month period. (The chart on this
page shows the sector breakdown.) The fund is well diversified by industries and
by individual holdings.
SUMMARY AND OUTLOOK
Based on most historical measures, the stock market appears somewhat expensive,
as it has for some time now. The market's price/earnings ratio is approaching
30, and the average dividend yield is barely above 1%. A review of a wide range
of other valuation measures also suggests at least some degree of overvaluation.
We are also concerned that investors have focused almost exclusively on maximum
short-term returns with little regard for traditional long-term goals or undue
risk, as evidenced in the speculative frenzy surrounding many new Internet
companies.
3
<PAGE>
We expect the Fed to maintain a tighter monetary stance with a view toward
restraining inflation in a rapidly growing economy. While the economic news and
low rate of inflation continue to be positive, it's difficult to envision an
even more positive environment for stocks than we have recently experienced.
These factors prompt us to remain somewhat cautious in our expectations for
2000. However, many sectors have been left behind in the strong advance of the
past few years, and we can identify many investment opportunities even in the
midst of the euphoria. Specifically, we believe selected value stocks offer good
potential for appreciation, especially when compared with some of the more
extended sectors of the market. Our strategy is to stick to basics and focus on
companies that appear undervalued relative to their prospects. We will continue
to manage the fund in our traditional style, trying to identify stocks that
offer a combination of strong potential return and relatively limited risk.
As always, we appreciate your confidence in T. Rowe Price and your continued
support.
Respectfully submitted,
/s/Brian C. Rogers
Brian C. Rogers
President and Chairman of the Investment Advisory Committee
January 21, 2000
- -----------------
PROSPECTUS CHANGE
- --------------------------------------------------------------------------------
The Board of Directors of voted at its meeting in February 2000 to distribute
the fund's income dividends annually instead of quarterly. Since long-term
capital appreciation is the primary objective of the fund, with income only a
secondary objective, the fund's quarterly dividends have been relatively small.
Our records indicate that an overwhelming majority of shareholders currently
reinvest these dividends rather than take them in cash. Moving from a quarterly
to annual payout schedule should help economize on fund expenses. As a result of
this decision, the income dividend for 2000 will be paid in December.
This updates the fund's prospectus dated May 1, 1999.
4
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
12/31/99
- --------------------------------------------------------------------------------
Phelps Dodge 2.0%
Sprint 1.8
Stanley Works 1.8
Amerada Hess 1.5
Hillenbrand Industries 1.5
- --------------------------------------------------------------------------------
US West 1.5
Boeing 1.5
Great Lakes Chemical 1.5
Lockheed Martin 1.4
American Home Products 1.4
- --------------------------------------------------------------------------------
Reed International 1.3
Seagram 1.3
CBS 1.3
Aetna 1.3
BP Amoco 1.3
- --------------------------------------------------------------------------------
News Corporation 1.2
Dana 1.2
Loews 1.2
Disney 1.2
Toys -R- Us 1.2
- --------------------------------------------------------------------------------
Delta 1.2
NIKE 1.2
Chubb 1.2
Berkshire Hathaway 1.2
Newmont Mining 1.2
- --------------------------------------------------------------------------------
Total 34.4%
Note: Table excludes reserves.
5
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
MAJOR PORTFOLIO CHANGES
(Listed in descending order of size)
6 Months Ended 12/31/99
Ten Largest Purchases Ten Largest Sales
- --------------------------------------------------------------------------------
Sprint * Browning-Ferris **
American Home Products * Micron Technology **
Dana * Motorola **
Waste Management * Inco **
NIKE * Raychem **
Hartford Financial Services Group * Transamerica **
Nordstrom * Aegon **
UNUMProvident * Murphy Oil **
US West * Champion International **
Martin Marietta Materials * General Mills **
* Position added
** Position eliminated
6
<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 benchmarks, which may include a
broad-based market index and a peer group average or index. Market indexes do
not include expenses, which are deducted from fund returns as well as mutual
fund averages and indexes.
VALUE FUND
- --------------------------------------------------------------------------------
As of 12/31/99
[GRAPH]
S&P 500 INDEX Lipper Multi-Cap Value Fund
9/30/94 10,000 10,000 10,000
12/94 9,998 9,811 10,310
12/95 13,756 12,905 14,419
12/96 16,914 15,624 18,529
12/97 22,557 19,859 23,948
12/98 29,004 21,820 25,590
12/99 35,106 23,195 27,933
- -----------------------------------
AVERAGE ANNUAL COMPOUND TOTAL RETURN
- --------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
Since Inception
Periods Ended 12/31/99 1 Year 3 Years 5 Years Inception Date
- --------------------------------------------------------------------------------
Value Fund 9.16% 14.66% 22.06% 21.61% 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.
7
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
- --------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year
Ended
12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 18.31 $ 18.24 $ 15.76 $ 13.21 $ 10.24
Investment activities
Net investment income (loss) 0.22 0.19 0.21 0.27* 0.27*
Net realized and
unrealized gain (loss) 1.38 1.04 4.31 3.45 3.78
Total from
investment activities 1.60 1.23 4.52 3.72 4.05
Distributions
Net investment income (0.21) (0.20) (0.21) (0.26) (0.26)
Net realized gain (2.20) (0.96) (1.83) (0.91) (0.82)
Total distributions (2.41) (1.16) (2.04) (1.17) (1.08)
NET ASSET VALUE
End of period $ 17.50 $ 18.31 $ 18.24 $ 15.76 $ 13.21
-----------------------------------------------------
Ratios/Supplemental Data
Total return@ 9.16% 6.85% 29.25% 28.51%* 39.85%*
Ratio of total expenses to
average net assets 0.92% 0.98% 1.05% 1.10%* 1.10%*
Ratio of net investment
income (loss) to average
net assets 1.14% 1.06% 1.26% 1.71%* 2.03%*
Portfolio turnover rate 67.8% 72.1% 67.2% 68.0% 89.7%
Net assets, end of period
(in thousands) $851,419 $774,514 $546,375 $197,846 $ 46,582
</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.
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
December 31, 1999
- -----------------------
STATEMENT OF NET ASSETS Shares Value
- --------------------------------------------------------------------------------
In thousands
COMMON STOCKS 94.7%
FINANCIAL 17.5%
Bank and Trust 7.5%
AmSouth 374,200 $ 7,227
Bank of America 150,000 7,528
Bank One 162,000 5,194
Firstar 365,925 7,730
Huntington Bancshares 220,000 5,246
KeyCorp 300,000 6,638
Mellon Financial 210,000 7,153
Summit Bancorp 250,000 7,656
Washington Mutual 350,000 9,100
-----------------
63,472
-----------------
Insurance 8.4%
Allstate 250,000 6,000
Chubb 175,000 9,855
Hartford Financial Services Group 200,000 9,475
Loews 170,000 10,317
PartnerRe Holdings 250,000 8,109
St. Paul Companies 200,000 6,738
Travelers Property Casualty (Class A) 200,000 6,850
UNUMProvident 275,000 8,817
XL Capital (Class A) 106,720 5,536
-----------------
71,697
-----------------
Financial Services 1.6%
Citigroup 150,000 8,334
Waddell & Reed Financial (Class A) 200,000 5,425
-----------------
13,759
-----------------
Total Financial 148,928
-----------------
UTILITIES 5.3%
Telephone 4.4%
Sprint 225,000 15,145
Telebras ADR 75,000 9,638
U S West 175,000 12,600
-----------------
37,383
-----------------
9
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Electric Utilities 0.9%
Niagara Mohawk * 529,500 $ 7,380
7,380
-----------------
Total Utilities 44,763
-----------------
CONSUMER NONDURABLES 15.3%
Beverages 0.6%
Coca-Cola Enterprises 250,000 5,031
5,031
-----------------
Food Processing 0.9%
McCormick 250,000 7,438
7,438
-----------------
Hospital Supplies/Hospital Management 2.5%
Boston Scientific * 375,000 8,203
Hillenbrand 400,000 12,675
20,878
-----------------
Pharmaceuticals 2.7%
American Home Products 295,100 11,638
Mylan Laboratories 175,000 4,408
Pharmacia & Upjohn 150,000 6,750
22,796
-----------------
Health Care Services 1.3%
Aetna 200,000 11,162
11,162
-----------------
Miscellaneous Consumer Products 7.3%
Armstrong World 175,000 5,841
Fortune Brands 200,000 6,613
Hasbro 400,000 7,625
NIKE (Class B) 200,000 9,912
Seagram 250,000 11,234
Stanley Works 500,000 15,062
UST 250,000 6,297
62,584
-----------------
Total Consumer Nondurables 129,889
-----------------
CONSUMER SERVICES 15.7%
General Merchandisers 1.0%
Neiman Marcus * 300,000 8,381
8,381
-----------------
10
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Specialty Merchandisers 5.1%
Nordstrom 350,000 $ 9,165
Office Depot * 450,000 4,922
Rite Aid 400,000 4,475
Safeway * 250,000 8,891
Toys ORO Us * 700,000 10,019
Tupperware 350,000 5,928
43,400
-----------------
Entertainment and Leisure 2.9%
Disney 350,000 10,238
Hilton 800,000 7,700
Reader's Digest (Class A) 225,000 6,581
24,519
-----------------
Media and Communications 5.4%
CBS * 175,000 11,189
Chris-Craft * 129,500 9,340
Dun & Bradstreet 225,000 6,638
News 275,000 10,519
R.R. Donnelley 350,000 8,684
46,370
-----------------
Printing and Publishing 1.3%
Reed International (GBP) 1,500,000 11,267
11,267
-----------------
Total Consumer Services 133,937
-----------------
CONSUMER CYCLICALS 4.4%
Automobiles and Related 1.8%
Dana 350,000 10,478
TRW 100,000 5,194
15,672
-----------------
Building and Real Estate 1.7%
Owens Corning 250,000 4,828
Starwood Hotels & Resorts Worldwide, REIT 400,000 9,400
14,228
-----------------
11
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Miscellaneous Consumer Durables 0.9%
Black & Decker 150,000 $ 7,837
7,837
-----------------
Total Consumer Cyclicals 37,737
-----------------
TECHNOLOGY 9.1%
Electronic Systems 1.0%
Hewlett-Packard 75,000 8,545
-----------------
8,545
-----------------
Information Processing 1.1%
COMPAQ Computer 350,000 9,472
-----------------
9,472
-----------------
Telecommunications 0.8%
3Com * 150,000 7,045
-----------------
7,045
-----------------
Aerospace and Defense 4.4%
Allegheny Technologies 337,500 7,573
Boeing 300,000 12,469
Honeywell International 100,000 5,769
Lockheed Martin 550,000 12,031
-----------------
37,842
-----------------
Office Automation 1.8%
Ceridian * 400,000 8,625
Xerox 275,000 6,239
-----------------
14,864
-----------------
Total Technology 77,768
-----------------
BUSINESS SERVICES AND TRANSPORTATION 7.4%
Airlines 1.2%
Delta 200,000 9,962
-----------------
9,962
-----------------
Computer Service and Software 1.6%
NCR * 200,000 7,575
Parametric Technology * 209,900 5,674
-----------------
13,249
-----------------
Transportation Services 1.0%
CNF Transportation 250,000 8,625
-----------------
8,625
-----------------
12
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Miscellaneous Business Services 1.0%
Waste Management 500,000 $ 8,594
8,594
-----------------
Railroads 2.6%
Canadian Pacific 350,000 7,547
Norfolk Southern 400,000 8,200
Union Pacific 150,000 6,544
22,291
-----------------
Total Business Services and Transportation 62,721
-----------------
ENERGY 6.0%
Energy Services 0.7%
Baker Hughes 276,000 5,813
5,813
-----------------
Integrated Petroleum - Domestic 2.4%
Amerada Hess 225,000 12,769
USX-Marathon 300,000 7,406
20,175
-----------------
Exploration and Production 1.6%
Burlington Resources 225,000 7,439
Unocal 200,000 6,713
14,152
-----------------
Integrated Petroleum - International 1.3%
BP Amoco ADR 184,666 10,953
10,953
-----------------
Total Energy 51,093
-----------------
PROCESS INDUSTRIES 8.7%
Diversified Chemicals 1.7%
Hercules 350,000 9,756
W. R. Grace * 325,000 4,510
14,266
-----------------
Specialty Chemicals 4.4%
Cytec Industries * 400,000 9,250
Great Lakes Chemical 325,000 12,411
Imperial Chemical ADR 150,000 6,384
Pall 450,000 9,703
37,748
-----------------
13
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Paper and Paper Products 1.0%
Fort James 325,000 $ 8,897
8,897
Forest Products 0.5%
Louisiana Pacific 275,000 3,919
3,919
Building and Construction 1.1%
Martin Marietta Materials 225,000 9,225
9,225
Total Process Industries 74,055
BASIC MATERIALS 4.2%
Metals 2.0%
Phelps Dodge 256,250 17,200
17,200
Mining 1.1%
Newmont Mining 400,000 9,800
9,800
Miscellaneous Materials 1.1%
Crown Cork & Seal 400,000 8,950
8,950
Total Basic Materials 35,950
MISCELLANEOUS 1.1%
Conglomerates 1.1%
Berkshire Hathaway (Class A) * 175 9,817
Total Miscellaneous 9,817
Total Common Stocks (Cost $841,124) 806,658
SHORT-TERM INVESTMENTS 5.1%
Money Market Funds 5.1%
Reserve Investment Fund, 6.16% # 42,980,526 42,981
Total Short-Term Investments (Cost $42,981) 42,981
14
<PAGE>
T. ROWE PRICE VALUE FUND
Value
- --------------------------------------------------------------------------------
In thousands
Total Investments in Securities
99.8% of Net Assets (Cost $884,105) $ 849,639
Other Assets Less Liabilities 1,780
NET ASSETS $ 851,419
------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 327
Accumulated net realized gain/loss - net of distributions 22,078
Net unrealized gain (loss) (34,465)
Paid-in-capital applicable to 48,656,027 shares of $0.0001 par
value capital stock outstanding; 1,000,000,000 shares authorized 863,479
NET ASSETS $ 851,419
------------
NET ASSET VALUE PER SHARE $ 17.50
------------
# Seven-day yield
* Non-income producing
ADR American Depository Receipt
REIT Real Estate Investment Trust
GBP British sterling
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
- -----------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In thousands
Year
Ended
12/31/99
Investment Income (Loss)
Income
Dividend $ 15,072
Interest 2,408
Total income 17,480
Expenses
Investment management 5,699
Shareholder servicing 1,775
Prospectus and shareholder reports 148
Custody and accounting 122
Registration 40
Legal and audit 14
Directors 8
Miscellaneous 7
Total expenses 7,813
Expenses paid indirectly (4)
Net expenses 7,809
Net investment income (loss) 9,671
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 87,608
Foreign currency transactions (69)
Net realized gain (loss) 87,539
Change in net unrealized gain or loss
Securities (38,579)
Other assets and liabilities
denominated in foreign currencies (3)
Change in net unrealized gain or loss (38,582)
Net realized and unrealized gain (loss) 48,957
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 58,628
--------------
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
- ----------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
In thousands
Year
Ended
12/31/99 12/31/98
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 9,671 $ 8,179
Net realized gain (loss) 87,539 62,691
Change in net unrealized gain or loss (38,582) (42,009)
Increase (decrease) in net assets from operations 58,628 28,861
Distributions to shareholders
Net investment income (9,204) (8,467)
Net realized gain (95,424) (39,006)
Decrease in net assets from distributions (104,628) (47,473)
Capital share transactions *
Shares sold 468,108 579,976
Distributions reinvested 96,937 45,081
Shares redeemed (442,140) (378,306)
Increase (decrease) in net assets from capital
share transactions 122,905 246,751
Net Assets
Increase (decrease) during period 76,905 228,139
Beginning of period 774,514 546,375
End of period $ 851,419 $ 774,514
----------------------------
*Share information
Shares sold 23,992 30,243
Distributions reinvested 5,545 2,469
Shares redeemed (23,188) (20,355)
Increase (decrease) in shares outstanding 6,349 12,357
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
December 31, 1999
- -----------------------------
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.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are
18
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
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. Expenses paid indirectly reflect
credits earned on daily uninvested cash balances at the custodian and are
used to reduce the fund's custody charges.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $552,430,000 and $543,250,000, respectively, for the
year ended December 31, 1999.
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 December 31, 1999, the cost of investments for federal income tax
purposes was substantially the same as for financial reporting and totaled
$884,105,000. Net unrealized loss aggregated $34,466,000 at period-end, of
which $83,221,000 related to appreciated investments and $117,687,000 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 $480,000 was payable at December 31, 1999. 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 0.295% for
assets in excess of $120 billion. At December 31, 1999, and for the year
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.
19
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund
receives certain other services. The manager computes the daily share price
and maintains the financial records of the fund. T. Rowe Price Services,
Inc. is the fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the fund. T. Rowe Price
Retirement Plan Services, Inc. provides subaccounting and recordkeeping
services for certain retirement accounts invested in the fund. The fund
incurred expenses pursuant to these related party agreements totaling
approximately $1,502,000 for the year ended December 31, 1999, of which
$164,000 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 year ended
December 31, 1999, totaled $2,396,000 and are reflected as interest income
in the accompanying Statement of Operations.
- -----------------------------------------------------------
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 12/31/99
- --------------------------------------------------------------------------------
We are providing this information as required by the Internal Revenue Code.
The amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
The fund's distributions to shareholders included:
. $51,880,000 from short-term capital gains,
. $43,544,000 from long-term capital gains, subject to the 20% rate
gains category.
For corporate shareholders, $13,048,000 of the fund's distributed income
and short-term capital gains qualified for the dividends-received
deduction.
20
<PAGE>
T. ROWE PRICE VALUE FUND
- --------------------------------------------------------------------------------
- ---------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
T. Rowe Price Value Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position
of T. Rowe Price Value Fund, Inc. (the "Fund") at December 31, 1999, and
the results of its operations, the changes in its net assets and the
financial highlights for each of the fiscal periods presented, in
conformity with accounting principles generally accepted in the United
States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1999 by correspondence with
custodians, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 20, 2000
21
<PAGE>
For fund and account information Walk-In Investor Centers:
or to conduct transactions, For directions, call 1-800-225-5132
24 hours, 7 days a week or visit our Web site
By touch-tone telephone
Tele*Access 1-800-638-2587 Baltimore Area
By Account Access on the Internet Downtown
www.troweprice.com/access 101 East Lombard Street
Owings Mills
For assistance Three Financial Center
with your existing 4515 Painters Mill Road
fund account, call:
Shareholder Service Center Boston Area
1-800-225-5132 386 Washington Street
Wellesley
To open a brokerage account
or obtain information, call: Colorado Springs
1-800-638-5660 4410 ArrowsWest Drive
Internet address: Los Angeles Area
www.troweprice.com Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
Plan Account Lines for retirement
plan participants: Tampa
The appropriate 800 number appears 4200 West Cypress Street
on your retirement account statement. 10th Floor
T. Rowe Price Associates Washington, D.C.
100 East Pratt Street 900 17th Street N.W.
Baltimore, Maryland 21202 Farragut Square
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus appropriate
to the fund or funds covered in this
report.
[LOGO OF T. ROWE PRICE]
T. Rowe Price Investment Services, Inc., Distributor. F07-050 12/31/99
