Item 1. Report to Shareholders
T. Rowe Price Small-Cap Value Fund
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December 31, 2003
Certified Annual Report
This report is certified under the Sarbanes-Oxley Act of 2002, which requires
that public companies, including mutual funds, affirm that the information
provided in their annual and semiannual shareholder reports fully and fairly
represents their financial position.
T. Rowe Price Small-Cap Value Fund
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Certified Annual Report
Performance Comparison
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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.
[Graphic Omitted]
SMALL-CAP VALUE FUND
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As of 12/31/03
Small-Cap Value Fund $35,236
Russell 2000 Index $24,721
Russell Small-Cap
2000 Value
Index Fund
12/93 $10,000 $10,000
12/94 9,818 9,862
12/95 12,611 12,750
12/96 14,691 15,888
12/97 17,976 20,323
12/98 17,519 17,788
12/99 21,242 18,000
12/00 20,601 21,559
12/01 21,113 26,289
12/02 16,788 25,827
12/03 24,721 35,236
Note: Performance for Advisor Class shares will vary due to the differing fee
structure. See returns table below.
Average Annual Compound Total Return
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Since Inception
Periods Ended 12/31/03 1 Year 5 Years 10 Years Inception Date
- --------------------------------------------------------------------------------
Small-Cap Value Fund 36.43% 14.65% 13.42% - -
Russell 2000 Index 47.25 7.13 9.47
Lipper Small-Cap Core
Funds Index 40.90 9.39 11.11
S&P 500 Stock Index 28.68 -0.57 11.07
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Small-Cap Value Fund-
Advisor Class 36.24 18.36% 3/31/00
Russell 2000 Index 47.25 2.24*
Lipper Small-Cap Core
Funds Index 40.90 4.55*
S&P 500 Stock Index 28.68 -6.25*
* Benchmark since-inception data are for the time period 3/31/00-12/31/03.
Returns do not reflect taxes that the shareholder may pay on fund distributions
or the redemption of fund shares. Past performance cannot guarantee future
results.
T. Rowe Price Small-Cap Value Fund
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Certified Annual Report
Dear Shareholder,
We are pleased to report that the Small-Cap Value Fund and the Small-Cap Value
Fund-Advisor Class generated solid returns for the 12 months ended December 31,
2003. As shown in the table on the preceding page, we underperformed the Lipper
Small-Cap Core Funds Index and the Russell 2000 Index for the 12-month period,
and handily outperformed over the longer time frames. The fund's one-year
returns trailed largely because of our lower-risk investment style.
As you know, the fund's investment objective is to provide long-term capital
growth through investments primarily in small companies whose common stocks are
believed to be undervalued. The fund employs a value approach in selecting
companies whose current stock prices do not appear to adequately reflect their
underlying values as measured by assets, earnings, cash flow, or business
franchises.
[Graphic Omitted]
Major Index Returns
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12-Month Return
S&P 500 Stock Index 29%
S&P MidCap 400 Index 36%
Russell 2000 Index 47%
Nasdaq Composite 50%
The Major Index Returns chart shows how various domestic stock markets performed
over the past 12 months. As you can see, domestic stocks registered solid
returns, with the technology-heavy Nasdaq Composite and the small-cap Russell
2000 showing the best results. Mid-cap stocks also outperformed large-cap
stocks, as represented by the S&P 500 Stock Index.
The Top 5 Sectors table shows how the fund's assets were allocated as of
December 31, 2003. Financials, industrials and business services, and consumer
discretionary stocks represent about three-fifths of the portfolio. However,
sector allocations are entirely the result of the bottom-up stock-selection
process.
Top 5 Sectors
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Percent of Net Assets
12/31/02 12/31/03
- --------------------------------------------------------------------------------
Financials 24.8% 23.2%
Industrials and Business Services 21.1 20.1
Consumer Discretionary 17.1 15.9
Information Technology 7.9 10.1
Materials 7.2 7.5
For comparison purposes, we have restated the historical weightings to
incorporate changes to the sector and industry classification system.
The Best and Worst Contributors table shows the stocks that had the largest
impact on the fund's performance during the year. Tire distributor TBC Corp. and
regional bank UCBH Holdings were the top positive T. Rowe Price Small-Cap Value
FundCertified Annual Reportcontributors, while restructuring services consultant
FTI Consulting was the largest detractor.
Best and Worst Contributors
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12 Months Ended 12/31/03
Best Contributors
- --------------------------------------------------------------------------------
TBC Corp.
UCBH Holdings
ProAssurance
East West Bancrop
Carpenter Technology
Worst Contributors
- --------------------------------------------------------------------------------
FTI Consulting
Analogic
Constar International
TransTechnology
Material Sciences
Finally, I'm sure you are aware that mutual fund companies have recently come
under scrutiny for their trading policies. The investigations have led to
allegations that executives of several mutual fund companies permitted or
engaged in improper mutual fund trading. In addition, certain intermediaries
that process fund transactions are alleged to have assisted some investors in
executing improper mutual fund trades. I want T. Rowe Price shareholders to know
that we emphatically condemn the abuses that have been revealed or alleged
against other firms in our industry. Our firm has not entered and will not enter
into
any agreements with any investors or intermediaries that authorize after-hours
trading or excessive short-term trading in any of our funds. T. Rowe Price
investors can be assured that our firm unequivocally opposes illegal or
inappropriate trading of any nature and has policies and procedures in place
designed to protect the best interests of our long-term shareholders. No T. Rowe
Price executives or portfolio managers or investment personnel of the T. Rowe
Price mutual funds have engaged in any inappropriate trading of T. Rowe Price
mutual funds. You may find out more about our trading policies and the steps we
take to protect your interests by visiting our Web site (troweprice.com). These
policies are also spelled out in your fund's prospectus.
We thank you for your continued support.
Respectfully,
James S. Riepe
Chairman
January 20, 2004
T. Rowe Price Small-Cap Value Fund
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Certified Annual Report
Financial Highlights For a share outstanding throughout each period
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Small-Cap Value class
Year
Ended
12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
NET ASSET VALUE
Beginning of period $ 21.94 $ 22.66 $ 19.14 $ 17.62 $ 18.97
Investment activities
Net investment
income (loss) 0.12 0.15 0.17 0.21 0.17
Net realized and
unrealized gain (loss) 7.86 (0.56) 4.00 3.19 -
Total from
investment activities 7.98 (0.41) 4.17 3.40 0.17
Distributions
Net investment income (0.12) (0.14) (0.17) (0.20) (0.17)
Net realized gain (0.41) (0.18) (0.48) (1.68) (1.35)
Total distributions (0.53) (0.32) (0.65) (1.88) (1.52)
Redemption fees
added to paid-in-capital - 0.01 - - -
NET ASSET VALUE
End of period $ 29.39 $ 21.94 $ 22.66 $ 19.14 $ 17.62
----------------------------------------------------
Ratios/Supplemental Data
Total return^ 36.43% (1.76)% 21.94% 19.77% 1.19%
Ratio of total expenses
to average net assets 0.88% 0.89% 0.89% 0.90% 0.92%
Ratio of net investment
income (loss) to average
net assets 0.48% 0.66% 0.88% 1.06% 0.84%
Portfolio turnover rate 10.3% 12.2% 16.8% 14.4% 7.3%
Net assets, end of period
(in millions) $ 3,287 $ 2,395 $ 2,012 $ 1,361 $ 1,262
^ 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 and payment of no redemption or account fees.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Small-Cap Value Fund
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Certified Annual Report
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Advisor Class
Year 3/31/00
Ended Through
12/31/03 12/31/02 12/31/01 12/31/00
NET ASSET VALUE
Beginning of period $ 21.86 $ 22.64 $ 19.14 $ 18.23
Investment activities
Net investment
income (loss) 0.10 0.14 0.10 0.10
Net realized and
unrealized gain (loss) 7.81 (0.60) 4.05 2.69
Total from
investment activities 7.91 (0.46) 4.15 2.79
Distributions
Net investment income (0.09) (0.14) (0.17) (0.20)
Net realized gains (0.41) (0.18) (0.48) (1.68)
Total distributions (0.50) (0.32) (0.65) (1.88)
NET ASSET VALUE
End of period $ 29.27 $ 21.86 $ 22.64 $ 19.14
-----------------------------------------------------
Ratios/Supplemental Data
Total return^ 36.24% (2.02)% 21.84% 15.77%
Ratio of total expenses to
average net assets 1.04% 1.06% 1.05% 0.80%!
Ratio of net investment
income (loss) to average
net assets 0.34% 0.64% 0.86% 1.50%!
Portfolio turnover rate 10.3% 12.2% 16.8% 14.4%!
Net assets, end of period
(in thousands) $ 307,484 $ 159,030 $ 25,296 $ 1,408
^ 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.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Small-Cap Value Fund
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Certified Annual Report December 31, 2003
Portfolio of Investments (ss.) Shares/Par Value
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($ 000s)
COMMON STOCKS & WARRANTS 92.3%
CONSUMER DISCRETIONARY 15.7%
Auto Components 0.9%
Keystone Automotive * 355,900 9,026
R & B * 400,000 6,200
Shiloh Industries * 300,000 1,890
Strattec Security *! 273,100 16,634
33,750
Automobiles 0.0%
Winnebago 10,000 687
687
Hotels, Restaurants & Leisure 3.0%
Applebee's 337,500 13,254
Champps Entertainment *! 400,000 2,984
Champps Entertainment, Warrants *@ 93,809 0
Garden Fresh Restaurant *! 220,000 3,533
Orient-Express, Class A 350,000 5,751
Rare Hospitality International *! 1,489,900 36,413
Ruby Tuesday 1,276,800 36,376
Steak 'N Shake * 586,000 10,460
108,771
Household Durables 2.2%
Chromcraft Revington *! 897,300 10,175
CSS Industries ! 926,300 28,725
Skyline ! 501,600 17,491
Stanley Furniture ! 380,000 11,970
WCI Communities * 500,000 10,305
78,666
Leisure Equipment & Products 0.6%
SCP Pool * 610,900 19,964
19,964
Media 2.8%
Courier ! 630,000 24,237
Fisher Companies * 300,000 15,300
Journal Register * 1,097,000 22,708
Obie Media *! 444,500 1,165
Saga Communications * 1,454,200 26,946
Spanish Broadcasting, Class A * 1,000,000 10,500
100,856
Multiline Retail 0.3%
Fred's 347,600 10,769
10,769
Specialty Retail 4.5%
Aaron Rents ! 1,472,200 29,635
Aaron Rents, Class A ! 341,250 6,310
Building Materials Holdings ! 750,000 11,648
Hancock Fabrics ! 1,518,400 21,986
Haverty Furniture 852,500 16,931
Hibbett Sporting Goods * 670,500 19,981
S & K Famous Brands *! 300,300 5,180
Stein Mart * 1,830,300 15,082
TBC Corp. *! 1,350,000 34,843
161,596
Textiles, Apparel, & Luxury Goods 1.4%
Culp *! 720,100 7,849
Cutter & Buck *! 1,000,000 9,380
Madden Steven *! 950,000 19,380
Unifi * 950,000 6,127
Velcro Industries 460,316 5,639
48,375
Total Consumer Discretionary 563,434
CONSUMER STAPLES 1.9%
Beverages 0.4%
Chalone Wine Group * 331,000 2,913
Coca-Cola Bottling 200,000 10,698
13,611
Food & Staples Retailing 0.5%
Casey's General Stores 424,700 7,500
Wild Oats Markets * 825,900 10,679
18,179
Food Products 0.4%
American Italian Pasta, Class A * 300,000 12,570
Monterey Pasta *! 835,000 3,114
15,684
Household Products 0.2%
Oil-Dri ! 470,000 7,478
7,478
Tobacco 0.4%
Standard Commercial ! 700,000 14,049
14,049
Total Consumer Staples 69,001
ENERGY 5.6%
Energy Equipment & Services 2.2%
Atwood Oceanics * 304,400 9,723
Carbo Ceramics 198,700 10,183
Compagnie Generale de Geophysique, ADR * 500,000 3,710
Hydril * 325,000 7,777
Lone Star Technologies * 800,000 12,784
TETRA Technologies *! 1,204,700 29,202
Trico Marine Services * 103,100 185
W-H Energy Services * 421,200 6,823
80,387
Oil & Gas 3.4%
Encore Aquisition * 1,150,000 28,348
Forest Oil * 800,000 22,856
Magnum Hunter Resources * 1,008,000 9,586
Penn Virginia 420,000 23,373
Ultra Petroleum * 875,000 21,543
Whiting Petroleum * 795,400 14,635
120,341
Total Energy 200,728
FINANCIALS 23.2%
Capital Markets 1.7%
Allied Capital 1,233,800 34,399
American Capital Strategies 496,600 14,764
Capital Southwest 81,000 5,022
Gladstone Capital 100,000 2,235
LaBranche & Co. 200,000 2,334
Sanders Morris Harris Group 175,000 2,170
60,924
Commercial Banks 7.9%
Boston Private Financial 325,000 8,073
CoBiz 336,000 6,189
Community First Bankshares 1,200,000 34,728
East West Bancorp 900,000 48,312
First Financial Fund 645,600 11,414
First Republic Bank ! 819,400 29,334
Glacier Bancorp 626,600 20,302
Silicon Valley Bancshares * 738,000 26,620
Southwest Bancorp 300,000 11,655
Texas Regional Bancshares, Class A 930,000 34,410
UCBH Holdings 940,000 36,632
Wintrust Financial 400,000 18,040
285,709
Insurance 6.2%
Brown and Brown 1,600,000 52,176
Hilb Rogal and Hamilton 100,000 3,207
Horace Mann Educators 100,000 1,397
Hub International 500,000 8,380
Markel * 119,200 30,218
MaxRe Capital 900,000 20,196
Midland 703,500 16,617
Ohio Casualty * 500,000 8,680
ProAssurance *! 1,542,600 49,595
Scottish Annuity & Life 550,000 11,429
Triad Guaranty * 412,300 20,759
222,654
Real Estate 7.4%
Bedford Property Investors, REIT ! 1,000,000 28,630
EastGroup Properties, REIT 300,000 9,714
Gables Residential Trust, REIT 1,000,000 34,740
Glenborough Realty Trust, REIT 775,000 15,461
Innkeepers USA, REIT ! 2,000,000 16,740
Kilroy Realty, REIT 1,250,000 40,938
LaSalle Hotel Properties, REIT 875,000 16,231
National Health Realty, REIT ! 655,600 12,915
Sun Communities, REIT ! 1,004,700 38,882
Trammell Crow * 1,500,000 19,875
Washington REIT SBI, REIT 1,050,000 30,660
264,786
Total Financials 834,073
HEALTH CARE 5.2%
Biotechnology 1.7%
deCODE GENETICS * 720,000 5,897
Diversa * 1,406,100 13,006
Exelixis * 2,012,500 14,248
Lexicon Genetics * 375,000 2,209
NPS Pharmaceuticals * 50,000 1,537
Progenics Pharmaceuticals * 350,000 6,601
Sequenom * 500,000 1,590
Strategic Diagnostics *! 1,000,000 4,730
Transkaryotic Therapies * 750,000 11,708
61,526
Health Care Equipment & Supplies 2.0%
Analogic 298,000 12,218
Arrow International 906,600 22,647
Atrion ! 168,000 7,434
IRIDEX *! 300,000 1,635
Matthews International, Class A 83,000 2,456
Quidel *! 1,699,300 18,386
Sonic Innovations *! 1,011,000 6,521
71,297
Health Care Providers & Services 1.2%
Capital Senior Living *! 1,206,700 7,095
National Healthcare * 150,000 2,985
Owens & Minor 1,365,400 29,916
Radiologix * 650,000 2,204
SRI Surgical Express *! 410,000 2,554
44,754
Pharmaceuticals 0.3%
Bone Care International *! 834,300 10,629
10,629
Total Health Care 188,206
INDUSTRIALS & BUSINESS SERVICES 19.6%
Aerospace & Defense 0.3%
EDO 300,000 7,395
TransTechnology *! 450,800 2,998
10,393
Air Freight & Logistics 0.7%
Hub Group, Class A *! 350,000 7,539
UTi Worldwide 500,000 18,965
26,504
Airlines 0.5%
Frontier Airlines * 1,155,400 16,476
Midwest Express Holdings * 185,600 781
17,257
Building Products 0.1%
Elcor 90,000 2,403
2,403
Commercial Services & Supplies 5.7%
Casella Waste Systems, Class A *! 1,494,000 20,453
Central Parking 575,000 8,585
CompX International ! 416,800 2,667
Electro Rent ! 1,991,900 26,572
FTI Consulting * 1,266,400 29,596
G&K Services, Class A 525,000 19,294
Intergrated Water Resources * 200,000 36
Ionics * 552,000 17,581
McGrath RentCorp ! 753,300 20,527
RemedyTemp, Class A *! 610,000 6,655
Right Management Consultants *! 959,300 17,901
Tetra Tech * 1,000,000 24,860
Waste Connections * 232,400 8,778
Waterlink *! 1,166,350 22
203,527
Construction & Engineering 0.7%
Insituform Technologies, Class A *! 1,560,800 25,753
25,753
Electrical Equipment 2.6%
C&D Technologies 1,150,000 22,046
Franklin Electric 406,800 24,607
Genlyte Group * 150,000 8,757
LSI Industries 600,000 8,100
Penn Engineering & Manufacturing ! 707,600 13,466
Penn Engineering & Manufacturing, Class A ! 315,000 5,402
Woodward Governor 198,700 11,292
93,670
Industrial Conglomerates 0.9%
Raven Industries ! 1,045,500 30,842
30,842
Machinery 3.9%
3D Systems *! 1,032,000 10,475
Badger Meter 150,000 5,723
BHA Group ! 601,300 15,123
JLG Industries 545,500 8,308
Joy Global 200,000 5,230
K-Tron *! 256,323 4,724
Lydall *! 1,246,600 12,703
Nordson 550,000 18,991
Oshkosh Truck 397,300 20,274
Repower Systems (EUR) 200,000 4,813
Thomas Industries ! 955,600 33,121
139,485
Marine 1.4%
International Shipholding *! 695,000 10,251
Kirby Corporation * 309,200 10,785
Overseas Shipholding Group 875,000 29,794
50,830
Road & Rail 2.3%
Dollar Thrifty Auto Group * 900,000 23,346
Landstar Systems * 1,414,200 53,796
Overnite * 180,000 4,095
Transport Corp of America *! 475,000 3,444
84,681
Trading Companies & Distributors 0.5%
Aceto ! 500,000 12,770
Valley National Gases *! 702,800 4,919
17,689
Total Industrials & Business Services 703,034
INFORMATION TECHNOLOGY 9.6%
Communications Equipment 1.7%
Cable Design Technologies *! 2,813,400 25,292
Comarco *! 574,300 6,317
Ixia * 1,250,000 14,625
Netsolve *! 675,000 5,468
Packeteer * 620,800 10,541
62,243
Computer & Peripherals 0.5%
SBS Technologies * 432,600 6,364
Synaptics * 850,000 12,733
19,097
Electronic Equipment & Instruments 2.2%
FLIR Systems * 516,500 18,853
Landauer ! 551,300 22,482
Littelfuse * 375,300 10,816
Methode Electronics, Class A 400,000 4,892
Planar Systems * 500,000 12,160
Richardson Electronics ! 728,000 8,947
78,150
Internet Software & Services 0.9%
MatrixOne * 850,000 5,236
Netegrity * 794,600 8,192
OneSource Information Services * 221,400 2,086
Websense * 590,000 17,252
32,766
IT Services 0.9%
Keane * 1,000,000 14,640
MPS Group * 1,865,500 17,442
32,082
Semiconductor & Semiconductor Equipment 2.1%
Advanced Power Technology *! 850,000 7,344
ATMI * 500,000 11,570
California Micro Devices *! 1,050,000 9,586
California Micro Devices, Warrants *!!@ 37,500 179
Entegris * 400,000 5,140
Exar * 546,300 9,331
Helix Technology 550,000 11,319
Mykrolis * 1,199,200 19,283
73,752
Software 1.3%
Catapult Communications * 550,000 7,975
Magma Design Automation * 100,000 2,334
Moldflow *! 500,000 5,675
NetIQ * 250,000 3,313
Progress Software * 420,300 8,599
ScanSoft * 860,000 4,575
SPSS * 415,100 7,422
Systems & Computer Technology * 435,000 7,112
47,005
Total Information Technology 345,095
MATERIALS 7.4%
Chemicals 2.2%
Airgas 310,000 6,659
American Vanguard ! 450,001 16,771
Arch Chemicals 435,200 11,167
Lesco * 425,000 5,521
MacDermid 261,000 8,937
Material Sciences * 601,000 6,076
Minerals Technologies 75,000 4,444
Penford ! 825,000 11,327
Symyx Technologies * 481,000 9,884
80,786
Construction Materials 1.1%
Ameron International ! 503,800 17,477
Florida Rock Industries 429,900 23,580
41,057
Containers & Packaging 0.5%
Applied Extrusion Technologies *! 933,300 2,473
Constar International * 456,300 2,460
Myers Industries 425,000 5,151
Peak International Limited *! 1,150,000 6,440
16,524
Metals & Mining 1.8%
Carpenter Technology 896,500 26,509
Cleveland-Cliffs * 300,000 15,285
Gibraltar Steel 800,000 20,120
Synalloy *! 397,800 2,753
64,667
Paper & Forest Products 1.8%
Buckeye Technologies * 850,000 8,543
Deltic Timber ! 675,000 20,520
Potlatch 665,500 23,139
Wausau-Mosinee Paper 875,000 11,830
64,032
Total Materials 267,066
TELECOMMUNICATION SERVICES 0.0%
Diversified Telecommunication Services 0.0%
Hickory Technology 175,000 2,004
Total Telecommunication Services 2,004
TRUSTS & MUTUAL FUNDS 0.7%
Trusts & Mutual Funds 0.7%
iShares Russell 2000 Value 150,000 24,060
Total Trusts & Mutual Funds 24,060
UTILITIES 2.7%
Electric Utilities 2.0%
Black Hills 901,900 26,904
Cleco 950,000 17,081
El Paso Electric * 908,100 12,123
Otter Tail 570,000 15,236
71,344
Multi-Utilities & Unregulated Power 0.3%
Vectren 520,000 12,818
12,818
Water Utilities 0.4%
Southwest Water ! 868,400 13,938
Western Water *! 664,500 66
14,004
Total Utilities 98,166
Total Miscellaneous Common Stocks 0.7% 24,428
Total Common Stocks & Warrants (Cost $2,110,031) 3,319,295
PREFERRED STOCKS 0.0%
Spanish Broadcasting Systems, 10.75%, 144A * 2,000 2,070
Total Preferred Stocks (Cost $2,000) 2,070
CONVERTIBLE PREFERRED STOCKS 0.1%
3D Systems *!!!@ 263,482 2,407
Western Water !@ 2,259 13
Total Convertible Preferred Stocks (Cost $3,022) 2,420
CONVERTIBLE BONDS 0.7%
3D Systems, 6.00%, 11/30/13 !!!@ 4,600,000 4,869
Champps Entertainment, 5.50%, 12/1/07 !@ 4,000,000 3,905
CNet, 5.00%, 3/1/06 ! 10,000,000 9,913
Richardson Electronics, 7.25%, 12/15/06 ! 4,675,000 4,301
Total Convertible Bonds (Cost $20,274) 22,988
SHORT-TERM INVESTMENTS 7.3%
Money Market Fund 7.2%
T. Rowe Price Reserve Investment Fund, 1.13% #! 259,126,622 259,126
259,126
U.S. Treasury Obligations 0.1%
U.S. Treasury Bills, 0.95%, 6/17/04 ++ 3,550,000 3,534
3,534
Total Short-Term Investments (Cost $262,660) 262,660
Total Investments in Securities
100.4% of Net Assets (Cost $2,397,987) $3,609,433
----------
Futures Contracts
- --------------------------------------------------------------------------------
($ 000s)
Contract Unrealized
Expiration Value Gain (Loss)
---------- -------- -----------
Long, 230 Russell 2000 Index contracts,
$3,390 par of 0.95% U.S. Treasury Bills
pledged as initial margin 3/04 $ 64,078 $ 1,301
Net payments (receipts) of variation
margin to date (2,083)
Variation margin receivable (payable)
on open futures contracts $ (782)
(ss.) Denominated in U.S. dollars unless otherwise noted
# Seven-day yield
* Non-income producing
++ All or a portion of this security is pledged to cover margin
requirements on futures contracts at December 31, 2003.
! Affiliated company--See Note 2.
!! Security contains restrictions as to public resale pursuant to the
Securities Act of 1933 and related rules--total of such securities at
period-end amounts to $7,455,000 and represents 0.2% of net assets
@ Security valued by the Fund's Board of Directors
144A Security was purchased pursuant to Rule 144A under the Securities Act
of 1933 and may be resold in transactions exempt from registration only
to qualified institutional buyers--total of such securities at
period-end amounts to $2,070,000 and represents 0.1% of net assets
ADR American Depository Receipts
EUR Euro
REIT Real Estate Investment Trust
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------
Certified Annual Report
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
($ 000s)
Assets
Investments in securities, at value
Affiliated companies (cost $952,147) $ 1,271,506
Other companies (cost $1,445,840) 2,337,927
Total investments in securities 3,609,433
Other assets 13,110
Total assets 3,622,543
Liabilities
Total liabilities 27,739
NET ASSETS $ 3,594,804
-------------
Net Assets Consist of:
Undistributed net realized gain (loss) $ 15,237
Net unrealized gain (loss) 1,212,748
Paid-in-capital applicable to 122,373,786 shares of
$0.01 par value capital stock outstanding;
1,000,000,000 shares authorized 2,366,819
NET ASSETS $ 3,594,804
-------------
NET ASSET VALUE PER SHARE
Small-Cap Value class
($3,287,319,874/111,868,499 shares outstanding) $ 29.39
-------------
Advisor Class
($307,484,066/10,505,287 shares outstanding) $ 29.27
-------------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------
Certified Annual Report
Statement of Operations
- --------------------------------------------------------------------------------
($ 000s)
Year
Ended
12/31/03
Investment Income (Loss)
Income
Dividend $ 36,554
Interest 3,081
Other 16
Total income 39,651
Expenses
Investment management 19,397
Shareholder servicing
Small-Cap Value class 5,124
Advisor Class 209
Distribution and service (12b-1) - Advisor Class 525
Prospectus and shareholder reports
Small-Cap Value class 277
Advisor Class 17
Custody and accounting 228
Registration 81
Legal and audit 25
Directors 17
Miscellaneous 23
Total expenses 25,923
Expenses paid indirectly (1)
Net expenses 25,922
Net investment income (loss) 13,729
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 38,707
Futures 17,423
Foreign currency transactions (22)
Net realized gain (loss) 56,108
T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------
Certified Annual Report
Statement of Operations
- --------------------------------------------------------------------------------
($ 000s)
Year
Ended
12/31/03
Change in net unrealized gain (loss)
Securities 860,104
Futures 2,108
Other assets and liabilities
denominated in foreign currencies 1
Change in net unrealized gain (loss) 862,213
Net realized and unrealized gain (loss) 918,321
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 932,050
-----------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------
Certified Annual Report
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
($ 000s)
Year
Ended
12/31/03 12/31/02
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 13,729 $ 16,728
Net realized gain (loss) 56,108 32,178
Change in net unrealized gain (loss) 862,213 (168,823)
Increase (decrease) in net
assets from operations 932,050 (119,917)
Distributions to shareholders
Net investment income
Small-Cap Value class (13,224) (15,128)
Advisor Class (904) (997)
Net realized gain
Small-Cap Value class (45,172) (19,447)
Advisor Class (4,118) (1,282)
Decrease in net assets from distributions (63,418) (36,854)
Capital share transactions *
Shares sold
Small-Cap Value class 526,787 1,229,724
Advisor Class 108,764 163,708
Distributions reinvested
Small-Cap Value class 55,729 32,700
Advisor Class 4,943 2,262
Shares redeemed
Small-Cap Value class (494,790) (735,378)
Advisor Class (29,251) (20,980)
Redemption fees received
Small-Cap Value class 261 1,135
Increase (decrease) in net assets from
capital share transactions 172,443 673,171
Net Assets
Increase (decrease) during period 1,041,075 516,400
Beginning of period 2,553,729 2,037,329
End of period $ 3,594,804 $ 2,553,729
------------------------------
T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------
Certified Annual Report
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
($ 000s)
Year
Ended
12/31/03 12/31/02
*Share information
Shares sold
Small-Cap Value class 21,018 50,979
Advisor Class 4,254 6,996
Distributions reinvested
Small-Cap Value class 1,941 1,500
Advisor Class 173 104
Shares redeemed
Small-Cap Value class (20,259) (32,086)
Advisor Class (1,195) (944)
Increase (decrease) in shares outstanding 5,932 26,549
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------
Certified Annual Report
Notes to Financial Statements
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Small-Cap Value Fund, Inc. (the fund) is registered under the
Investment Company Act of 1940 (the 1940 Act) as a diversified, open-end
management investment company. The fund seeks long-term capital growth by
investing primarily in small companies whose common stocks are believed to be
undervalued. The fund has two classes of shares: Small-Cap Value Fund (Small-Cap
Value class), offered since June 30, 1988, and Small-Cap Value--Advisor Class
(Advisor Class), offered since March 31, 2000. Advisor Class shares are sold
only through brokers and other financial intermediaries that are compensated by
the class for distribution and certain administrative services under a
Board-approved Rule 12b-1 plan. Each class has exclusive voting rights on
matters related solely to that class, separate voting rights on matters that
relate to both classes, and, in all other respects, the same rights and
obligations as the other class.
The accompanying financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America, which
require the use of estimates made by fund management.
Valuation
The fund values its investments and computes its net asset value per share at
the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day
that the NYSE is open for business. Equity securities listed or regularly traded
on a securities exchange or in the over-the-counter market are valued at the
last quoted sale price, or official closing price for certain markets, at the
time the valuations are made. A security that 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 are valued at the mean of the latest bid and ask prices for domestic
securities and the last quoted sale price for international securities.
Debt securities are generally traded in the over-the-counter market. Securities
with original maturities of one year or more are valued at prices furnished by
dealers who make markets in such securities or by an independent pricing
service, which considers yield or price of bonds of comparable quality, coupon,
maturity, and type, as well as prices quoted by dealers who make markets in such
securities. Securities with original maturities of less than one year are valued
at amortized cost in local currency, which approximates fair value when combined
with accrued interest.
Investments in mutual funds are valued at the mutual fund's closing net asset
value per share on the day of valuation. Financial futures contracts are valued
at closing settlement prices.
Other investments and those 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 the T. Rowe Price Valuation Committee,
established by the fund's Board of Directors.
Most foreign markets close before the NYSE. Normally, developments that could
affect the values of securities that occur between the close of a foreign market
and the close of the NYSE will not be reflected in security valuations used by
the fund to compute its share price. However, if developments are so significant
that they will, in the judgment of the fund, clearly and materially affect
security values, such valuations may be adjusted to reflect the estimated fair
value of the securities as of the close of the NYSE, as determined in good faith
by the T. Rowe Price Valuation Committee, established by the fund's Board of
Directors.
Currency Translation
Assets, including investments, and liabilities denominated in foreign currencies
are translated into U.S. dollar values each day at the prevailing exchange rate,
using the mean of the bid and ask prices of such currencies against U.S. dollars
as quoted by a major bank. Purchases and sales of securities, income, and
expenses are translated into U.S. dollars at the prevailing exchange rate on the
date of the transaction. The effect of changes in foreign currency exchange
rates on realized and unrealized security gains and losses is reflected as a
component of security gains and losses.
Class Accounting
The Advisor Class pays distribution and administrative expenses in the form of
Rule 12b-1 fees, in an amount not exceeding 0.25% of the class's average daily
net assets. Shareholder servicing, prospectus, and shareholder report expenses
incurred by each class are charged directly to the class to which they relate.
Expenses common to both classes, investment income, and realized and unrealized
gains and losses are allocated to the classes based upon the relative daily net
assets of each class. Income distributions are declared and paid by each class
on an annual basis. Capital gain distributions, if any, are declared and paid by
the fund, typically on an annual basis.
Rebates and Credits
Subject to best execution, the fund may direct certain security trades to
brokers who have agreed to rebate a portion of the related brokerage commission
to the fund in cash. Commission rebates are included
in realized gain on securities in the accompanying financial statements and
totaled $54,000 for the year ended December 31, 2003. Additionally, the fund
earns credits on temporarily uninvested cash balances at the custodian that
reduce the fund's custody charges. Custody expense in the accompanying financial
statements is presented before reduction for credits, which are reflected as
expenses paid indirectly.
Redemption Fees
A 1.0% fee is assessed on redemptions of fund shares held less than 1 year. Such
fees are withheld from redemption proceeds and retained by the fund, and have
the primary effect of increasing paid-in capital.
In-Kind Redemption
In certain circumstances, the fund may distribute portfolio securities rather
than cash as payment for a redemption of fund shares (in-kind redemption). For
financial reporting purposes, the fund recognizes a gain on in-kind redemptions
to the extent the value of the distributed securities on the date of redemption
exceeds the cost of those securities. Gains and losses realized on in-kind
redemptions are not recognized for tax purposes, and are reclassified from
undistributed realized gain (loss) to paid-in capital. During the year ended
December 31, 2003, the fund realized $7,329,000 of net gain on $12,089,000 of
in-kind redemptions.
Investment Transactions, Investment Income, and Distributions
Income and expenses are recorded on the accrual basis. Premiums and discounts on
debt securities are amortized for financial reporting purposes. Dividends
received from mutual fund investments are reflected as dividend income; capital
gain distributions are reflected as realized gain/loss. Dividend income and
capital gain distributions are recorded on the ex-dividend date. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Payments ("variation margin") made or
received to settle the daily fluctuations in the value of futures contracts are
recorded as unrealized gains or losses until the contracts are closed.
Unrealized gains and losses on futures contracts are included in other assets
and other liabilities, respectively, and in the change in net unrealized gain or
loss in the accompanying financial statements. Distributions to shareholders are
recorded on the ex-dividend date. Income distributions are declared and paid on
an annual basis. Capital gain distributions, if any, are typically declared and
paid on an annual basis.
Other
In the normal course of business, the fund enters into contracts that provide
general indemnifications. The fund's maximum exposure under these
arrangements is dependent on claims that may be made against the fund in the
future and, therefore, cannot be estimated; however, based on experience, the
risk of material loss from such claims is considered remote.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Futures Contracts
During the year ended December 31, 2003, the fund was a party to futures
contracts, which provide for the future sale by one party and purchase by
another of a specified amount of a specific financial instrument at an agreed
upon price, date, time, and place. Risks arise from possible illiquidity of the
futures market and from movements in security values.
Affiliated Companies
The fund may invest in certain securities that are considered affiliated
companies. As defined by the 1940 Act, an affiliated company is one in which the
fund owns 5% or more of the outstanding voting securities. At December 31, 2003,
the value of affiliated companies totaled $1,271,506,000, representing 35.2% of
the value of the fund's investments in securities. For the year then ended,
$13,618,000 (37.3%) of dividend income, $2,541,000 (82.5%) of interest income,
and $17,656,000 (31.5%) of net realized gain reflected in the accompanying
financial statements resulted from the fund's transactions with affiliated
companies.
Other
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $308,002,000 and $281,952,000, respectively, for the year ended
December 31, 2003.
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 under Subchapter M of the
Internal Revenue Code and distribute to shareholders all of its taxable income
and gains. Federal income tax regulations differ from generally accepted
accounting principles; therefore, distributions determined in accordance with
tax regulations may differ significantly in amount or character from net
investment
income and realized gains for financial reporting purposes. Financial reporting
records are adjusted for permanent book/tax differences to reflect tax
character. Financial records are not adjusted for temporary differences.
Distributions during the year ended December 31, 2003 were characterized as
follows for tax purposes:
- --------------------------------------------------------------------------------
Ordinary income $ 20,139,000
Long-term capital gain 43,279,000
Total distributions $ 63,418,000
----------------
At December 31, 2003, the tax-basis components of net assets were as follows:
- --------------------------------------------------------------------------------
Unrealized appreciation $ 1,299,616,000
Unrealized depreciation (88,170,000)
Net unrealized appreciation (depreciation) 1,211,446,000
Undistributed ordinary income 3,834,000
Undistributed long-term capital gain 12,705,000
Paid-in capital 2,366,819,000
Net assets $ 3,594,804,000
----------------
Federal income tax regulations require the fund to treat the gain/loss on
certain open futures contracts as realized on the last day of the tax year;
accordingly, $1,301,000 of unrealized gains reflected in the accompanying
financial statements were realized for tax purposes as of December 31, 2003.
For the year ended December 31, 2003, the fund recorded the following permanent
reclassifications to reflect tax character. Reclassifications to paid-in capital
relate primarily to the current redemptions in kind and a tax practice that
treats a portion of the proceeds from each redemption of capital shares as a
distribution of taxable net investment income and/or realized capital gain.
Results of operations and net assets were not affected by these
reclassifications.
- --------------------------------------------------------------------------------
Undistributed net investment income $ 343,000
Undistributed net realized gain (9,363,000)
Paid-in capital 9,020,000
At December 31, 2003, the cost of investments for federal income tax purposes
was $2,399,289,000.
NOTE 4 - RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price
Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. The
investment management agreement between the fund and the manager provides for an
annual investment management fee, which is computed daily and paid monthly. The
fee consists of an individual fund fee, equal to 0.35% of the fund's average
daily net assets, and the fund's pro-rata share of a group fee. The group fee is
calculated based on the combined net assets of certain mutual funds sponsored by
Price Associates (the group) applied to a graduated fee schedule, with rates
ranging from 0.48% for the first $1 billion of assets to 0.295% for assets in
excess of $120 billion. The fund's portion of the group fee is determined by the
ratio of its average daily net assets to those of the group. At December 31,
2003, the effective annual group fee rate was 0.32%, and investment management
fee payable totaled $2,003,000.
The Advisor Class is also subject to a contractual expense limitation through
December 31, 2003. During the limitation period, the manager is required to
waive its management fee and reimburse the class for any expenses, excluding
interest, taxes, brokerage commissions, and extraordinary expenses, that would
otherwise cause the class's ratio of total expenses to average net assets
(expense ratio) to exceed its expense limitation of 1.15%. Through December 31,
2005, the class is required to repay the manager for expenses previously
reimbursed and management fees waived to the extent its net assets have grown or
expenses have declined sufficiently to allow repayment without causing the
class's expense ratio to exceed its expense limitation. For the year ended
December 31, 2003, the Advisor Class operated below its expense limitation.
In addition, the fund has entered into service agreements with Price Associates
and two wholly owned subsidiaries of Price Associates (collectively, Price).
Price Associates computes the daily share prices and maintains the financial
records of the fund. T. Rowe Price Services, Inc., provides shareholder and
administrative services in its capacity as the fund's transfer and dividend
disbursing agent. T. Rowe Price Retirement Plan Services, Inc., provides
subaccounting and record-
keeping services for certain retirement accounts invested in the Small-Cap Value
class and Advisor Class. Expenses incurred pursuant to these service agreements
totaled $3,821,000 for the year ended December 31, 2003, of which $338,000 was
payable at period-end.
The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe
Price Government Reserve Investment Fund (collectively, the Reserve Funds),
open-end management investment companies managed by Price Associates. The
Reserve Funds are offered as cash management options only to mutual funds,
trusts, and other accounts managed by Price Associates and/or its affiliates,
and are not available to the public. The Reserve Funds pay no investment
management fees. During the year ended December 31, 2003, dividend income from
the Reserve Funds totaled $1,808,000.
T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------
Certified Annual Report
Report of Independent Auditors
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
T. Rowe Price Small-Cap Value Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, 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 Small-Cap Value Fund,
Inc. (the "Fund") at December 31, 2003, 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 of America. 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 of America, 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, 2003 by correspondence with custodians and brokers, provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 26, 2004
T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------
Certified Annual Report
Tax Information (Unaudited) for the Tax Year Ended 12/31/03
- --------------------------------------------------------------------------------
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:
o $7,030,000 from short-term capital gains,
o $44,327,000 from long-term capital gains, of which $16,197,000 was
subject to the 15% rate gains category, and $28,130,000 to the 20% rate
gains category.
For taxable non-corporate shareholders, $22,370,000 of the fund's income and
short-term capital gains represents qualified dividend income subject to the 15%
rate category.
For corporate shareholders, $21,833,000 of the fund's income and short-term
capital gains qualified for the dividends-received deduction.
Information on Proxy Voting
- --------------------------------------------------------------------------------
A description of the policies and procedures that the T. Rowe Price Small-Cap
Value Fund uses to determine how to vote proxies relating to portfolio
securities is available, without charge, upon request by calling 1-800-225-5132.
It also appears in the fund's Statement of Additional Information (Form 485B),
which can be found on the SEC's Web site, www.sec.gov.
T. Rowe Price Small-Cap Value Fund
- --------------------------------------------------------------------------------
Certified Annual Report
About the Fund's Directors and Officers
- --------------------------------------------------------------------------------
Your fund is governed by a Board of Directors that meets regularly to review
investments, performance, expenses, and other business matters, and is
responsible for protecting the interests of shareholders. The majority of the
fund's directors are independent of T. Rowe Price Associates, Inc. (T. Rowe
Price); "inside" directors are officers of T. Rowe Price. The Board of Directors
elects the fund's officers, who are listed in the final table. The business
address of each director and officer is 100 East Pratt Street, Baltimore, MD
21202. The Statement of Additional Information includes additional information
about the fund directors and is available without charge by calling a T. Rowe
Price representative at 1-800-225-5132.
Independent Directors
Name
(Date of Birth) Principal Occupation(s) During Past 5 Years and
Year Elected * Directorships of Other Public Companies
Anthony W. Deering Director, Chairman of the Board, President, and
(1/28/45) Chief Executive Officer, The Rouse Company, real
2001 estate developers; Director, Mercantile Bank
(4/03 to present)
Donald W. Dick, Jr. Principal, EuroCapital Advisors, LLC, an
(1/27/43) acquisition and management advisory firm
1994
David K. Fagin Director, Golden Star Resources Ltd., Canyon
(4/9/38) Resources Corp. (5/00 to present), and Pacific
1994 Rim Mining Corp. (2/02 to present); Chairman
and President, Nye Corp.
Karen N. Horn Managing Director and President, Global Private
(9/21/43) Client Services, Marsh Inc.; Managing Director
2003 and Head of International Private Banking,
Bankers Trust; Director, Eli Lilly and Company
F. Pierce Linaweaver President, F. Pierce Linaweaver & Associates,
(8/22/34) Inc., consulting environmental and civil engineers
2001
John G. Schreiber Owner/President, Centaur Capital Partners, Inc., a
(10/21/46) real estate investment company; Senior Advisor
2001 and Partner, Blackstone Real Estate Advisors,
L.P.; Director, AMLI Residential Properties Trust,
Host Marriott Corp., and The Rouse Company
Hubert D. Vos ** Owner/President, Stonington Capital Corp.,
(8/2/33) a private investment company
1988
Paul M. Wythes ** Founding Partner, Sutter Hill Ventures, a
(6/23/33) venture capital limited partnership, providing
1988 equity capital to young high-technology companies
throughout the United States; Director,
Teltone Corp.
* Each independent director oversees 107 T. Rowe Price portfolios and serves
until retirement, resignation, or election of a successor.
** Retired from Board of Directors effective December 31, 2003.
Inside Directors
Name
(Date of Birth)
Year Elected *
[Number of T. Rowe Price Principal Occupation(s) During Past 5 Years
Portfolios Overseen] and Directorships of Other Public Companies
John H. Laporte, CFA Director and Vice President, T. Rowe Price
(7/26/45) Group, Inc.; Vice President, T. Rowe Price
1994
[15]
James S. Riepe Director and Vice President, T. Rowe Price;
(6/25/43) Vice Chairman of the Board, Director, and
1988 Vice President, T. Rowe Price Group, Inc.;
[107] Chairman of the Board and Director, T. Rowe Price
Global Asset Management Limited, T. Rowe Price
Global Investment Services Limited, T. Rowe Price
Investment Services, Inc., T. Rowe Price
Retirement Plan Services, Inc., and T. Rowe
Price Services, Inc.; Chairman of the Board,
Director, President, and Trust Officer, T. Rowe
Price Trust Company; Director, T. Rowe Price
International, Inc.; Chairman of the Board,
Small-Cap Value Fund
M. David Testa, CFA, CIC Chief Investment Officer, Director, and Vice
(4/22/44) President, T. Rowe Price; Vice Chairman of the
1997 Board, Chief Investment Officer, Director, and
[107] Vice President, T. Rowe Price Group, Inc.;
Chairman of the Board and Director, T. Rowe Price
International, Inc.; Director, T. Rowe Price
Global Asset Management Limited and T. Rowe Price
Global Investment Services Limited; Director and
Vice President, T. Rowe Price Trust Company
* Each inside director serves until retirement, resignation, or election of a
successor.
Officers
Name (Date of Birth)
Title and Fund(s) Served Principal Occupation(s)
Preston G. Athey, CFA, CIC (7/17/49) Vice President, T. Rowe Price, T. Rowe
President, Small-Cap Value Fund Price Group, Inc., and T. Rowe Price
Trust Company
Stephen V. Booth (6/21/61) Vice President, T. Rowe Price, T. Rowe
Vice President, Small-Cap Value Fund Price Group, Inc., and T. Rowe Price
Trust Company
Joseph A. Carrier (12/30/60) Vice President, T. Rowe Price, T. Rowe
Treasurer, Small-Cap Value Fund Price Group, Inc., and T. Rowe Price
Investment Services, Inc.
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Officers (continued)
Name (Date of Birth)
Title and Fund(s) Served Principal Occupation(s)
Hugh M. Evans III, CFA (5/17/66) Vice President, T. Rowe Price
Vice President, Small-Cap Value Fund and T. Rowe Price Group, Inc.
Roger L. Fiery III, CPA (2/10/59) Vice President, T. Rowe Price, T. Rowe
Vice President, Small-Cap Value Fund Price Group, Inc., T. Rowe Price
International, Inc., and T. Rowe Price
Trust Company
Francies W. Hawks (2/2/44) Assistant Vice President, T. Rowe Price
Assistant Vice President, Small-Cap
Value Fund
Henry H. Hopkins (12/23/42) Director and Vice President, T. Rowe
Vice President, Small-Cap Value Fund Price Group, Inc., T. Rowe Price
Investment Services, Inc., T. Rowe Price
Services, Inc., and T. Rowe Price Trust
Company; Vice President, T. Rowe Price,
T. Rowe Price International, Inc., and
T. Rowe Price Retirement Plan
Services, Inc.
Susan J. Klein (4/18/50) Vice President, T. Rowe Price
Vice President, Small-Cap Value Fund
Patricia B. Lippert (1/12/53) Assistant Vice President, T. Rowe Price
Secretary, Small-Cap Value Fund and T. Rowe Price Investment
Services, Inc.
Gregory A. McCrickard, CFA (10/19/58) Vice President, T. Rowe Price, T. Rowe
Vice President, Small-Cap Value Fund Price Group, Inc., and T. Rowe Price
Trust Company
Curt J. Organt (1/5/68) Vice President, T. Rowe Price; formerly
Vice President, Small-Cap Value Fund Financial and Marketing Analyst,
DAP Products, Inc.
Charles G. Pepin (4/23/66) Vice President, T. Rowe Price
Vice President, Small-Cap Value Fund and T. Rowe Price Group, Inc.
J. David Wagner, CFA (2/25/74) Vice President, T. Rowe Price and
Vice President, Small-Cap Value Fund T. Rowe Price Group, Inc.; formerly
student, Darden Graduate School of
Business Administration, University of
Virginia (to 2000)
David J. Wallack (7/2/60) Vice President, T. Rowe Price and
Vice President, Small-Cap Value Fund T. Rowe Price Group, Inc.
Julie L. Waples (5/12/70) Vice President, T. Rowe Price
Vice President, Small-Cap Value Fund
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Item 2. Code of Ethics.
As of the end of the period covered by this report, the registrant has adopted a
code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. A copy of this code of
ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were
approved or waivers were granted to this code of ethics during the period
covered by this report.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Directors/Trustees has determined that Mr. David K.
Fagin qualifies as an audit committee financial expert, as defined in Item 3 of
Form N-CSR. Mr. Fagin is considered independent for purposes of Item 3 of Form
N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) - (d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal accountant were
as follows:
2003 2002
Audit Fees $15,754 $13,743
Audit-Related Fees 950 --
Tax Fees 4,092 3,327
All Other Fees 124 185
Audit fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the accountant in
connection with statutory and regulatory filings. Audit-related fees include
amounts reasonably related to the performance of the audit of the registrant's
financial statements, specifically the issuance of a report on internal
controls. Tax fees include amounts related to tax compliance, tax planning, and
tax advice. Other fees include the registrant's pro-rata share of amounts for
agreed-upon procedures in conjunction with service contract approvals by the
registrant's Board of Directors/Trustees.
(e)(1) The registrant's audit committee has adopted a policy whereby audit and
non-audit services performed by the registrant's principal accountant for the
registrant, its investment adviser, and any entity controlling, controlled by,
or under common control with the investment adviser that provides ongoing
services to the registrant require pre-approval in advance at regularly
scheduled audit committee meetings. If such a service is required between
regularly scheduled audit committee meetings, pre-approval may be authorized by
one audit committee member with ratification at the next scheduled audit
committee meeting. Waiver of pre-approval for audit or non-audit services
requiring fees of a de minimis amount is not permitted.
(2) No services included in (b) - (d) above were approved pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the preceding
fiscal year by the registrant's principal accountant for non-audit services
rendered to the registrant, its investment adviser, and any entity controlling,
controlled by, or under common control with the investment adviser that provides
ongoing services to the registrant were $719,000 and $671,000, respectively, and
were less than the aggregate fees billed for those same periods by the
registrant's principal accountant for audit services rendered to the T. Rowe
Price Funds.
(h) All non-audit services rendered in (g) above were pre-approved by the
registrant's audit committee. Accordingly, these services were considered by the
registrant's audit committee in maintaining the principal accountant's
independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial officer
have evaluated the registrant's disclosure controls and procedures within 90
days of this filing and have concluded that the registrant's disclosure controls
and procedures were effective, as of that date, in ensuring that information
required to be disclosed by the registrant in this Form N-CSR was recorded,
processed, summarized, and reported timely.
(b) The registrant's principal executive officer and principal financial officer
are aware of no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 10. Exhibits.
(a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is
attached.
(a)(2) Separate certifications by the registrant's principal executive officer
and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of
1940, are attached.
(b) A certification by the registrant's principal executive officer and
principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940,
is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
T. Rowe Price Small-Cap Value Fund, Inc.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date February 13, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date February 13, 2004
By /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date February 13, 2004