Item 1. Report to Shareholders
T. Rowe Price Value Fund
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June 30, 2004
Certified Semiannual 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 VALUE FUND
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Certified Semiannual Report (Unaudited)
Financial Highlights For a share outstanding throughout each period
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Investor Class
6 Months Year
Ended Ended
6/30/04 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
NET ASSET VALUE
Beginning
of period $ 20.01 $ 15.56 $ 18.88 $ 19.15 $ 17.50 $ 18.31
Investment
activities
Net investment
income (loss) 0.07 0.18 0.18 0.17 0.24 0.22
Net realized
and unrealized
gain (loss) 0.92 4.48 (3.31) 0.13** 2.48 1.38
Total from
investment
activities 0.99 4.66 (3.13) 0.30 2.72 1.60
Distributions
Net investment
income - (0.20) (0.15) (0.17) (0.23) (0.21)
Net realized gain - (0.01) (0.04) (0.40) (0.84) (2.20)
Total
distributions - (0.21) (0.19) (0.57) (1.07) (2.41)
NET ASSET VALUE
End of period $ 21.00 $ 20.01 $ 15.56 $ 18.88 $ 19.15 $ 17.50
--------------------------------------------------------------
Ratios/
Supplemental
Data
Total return^ 4.95% 30.00% (16.58)% 1.60% 15.75% 9.16%
Ratio of total
expenses to
average net assets 0.94%! 0.97% 0.95% 0.94% 0.91% 0.92%
Ratio of net
investment income
(loss) to average
net assets 0.80%! 1.06% 1.01% 0.93% 1.38% 1.14%
Portfolio
turnover rate 18.2%! 30.6% 29.6% 42.2% 55.9% 67.8%
Net assets,
end of period
(in millions) $ 1,812 $ 1,482 $ 1,140 $ 1,322 $ 989 $ 851
^ 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.
** The amount presented is calculated pursuant to a methodology prescribed by
the Securities and Exchange Commission for a share outstanding throughout
the period. This amount is inconsistent with the fund's aggregate gains and
losses because of the timing of sales and redemptions of fund shares in
relation to fluctuating market values for the investment portfolio.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Value Fund
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Certified Semiannual Report (Unaudited)
Financial Highlights For a share outstanding throughout each period
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Advisor Class
6 Months Year 3/31/00
Ended Ended Through
6/30/04 12/31/03 12/31/02 12/31/01 12/31/00
NET ASSET VALUE
Beginning of period $ 19.93 $ 15.51 $ 18.84 $ 19.14 $ 17.57
Investment activities
Net investment
income (loss) 0.09 0.15 0.10 0.10 0.17*
Net realized and
unrealized gain (loss) 0.89 4.48 (3.24) 0.17** 2.45
Total from
investment activities 0.98 4.63 (3.14) 0.27 2.62
Distributions
Net investment income - (0.20) (0.15) (0.17) (0.21)
Net realized gain - (0.01) (0.04) (0.40) (0.84)
Total distributions - (0.21) (0.19) (0.57) (1.05)
NET ASSET VALUE
End of period $ 20.91 $ 19.93 $ 15.51 $ 18.84 $ 19.14
----------------------------------------------------
Ratios/Supplemental Data
Total return^ 4.92% 29.91% (16.67)% 1.45% 15.11%*
Ratio of total expenses
to average net assets 1.04%! 1.04% 1.08% 1.06% 1.10%*!
Ratio of net investment
income (loss) to
average net assets 0.70%! 0.99% 1.08% 0.78% 1.04%*!
Portfolio turnover rate 18.2%! 30.6% 29.6% 42.2% 55.9%!
Net assets, end of
period (in thousands) $ 93,524 $ 73,739 $ 47,116 $ 8,673 $ 77
^ 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 4/30/06.
** The amount presented is calculated pursuant to a methodology prescribed by
the Securities and Exchange Commission for a share outstanding throughout
the period. This amount is inconsistent with the fund's aggregate gains and
losses because of the timing of sales and redemptions of fund shares in
relation to fluctuating market values for the investment portfolio.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Value Fund
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Certified Semiannual Report (Unaudited) June 30, 2004
Portfolio of Investments (1) Shares/$ Par Value
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(Cost and value in $ 000s)
COMMON STOCKS 95.0%
CONSUMER DISCRETIONARY 18.4%
Auto Components 0.1%
Delphi 300,000 3,204
3,204
Automobiles 1.3%
Ford Motor 699,817 10,952
Harley-Davidson 228,000 14,122
25,074
Hotels, Restaurants & Leisure 1.8%
Fairmont Hotels 740,000 19,943
McDonald's 550,000 14,300
34,243
Household Durables 2.8%
Fortune Brands 250,000 18,858
Newell Rubbermaid 799,500 18,788
Sony ADR 399,400 15,197
52,843
Leisure Equipment & Products 1.0%
Eastman Kodak 300,000 8,094
Hasbro 557,300 10,589
18,683
Media 9.4%
Cablevision Systems, Class A * 700,000 13,755
Comcast
Class A * 202,000 5,662
Class A Special * 885,000 24,435
Disney 829,400 21,141
Dow Jones 285,000 12,854
Liberty Media
Class A * 2,000,200 17,982
Series A * 100,010 3,710
New York Times, Class A 410,400 18,349
Pearson (GBP) 725,000 8,806
Reuters (GBP) 1,750,000 11,754
Time Warner * 1,271,600 22,355
Viacom, Class B 500,000 17,860
178,663
Multiline Retail 1.6%
Family Dollar Stores 460,000 13,993
May Department Stores 585,000 16,082
30,075
Specialty Retail 0.4%
RadioShack 225,000 6,442
Toys "R" Us * 110,000 1,752
8,194
Total Consumer Discretionary 350,979
CONSUMER STAPLES 5.8%
Beverages 1.7%
Coca-Cola Enterprises 500,000 14,495
Heineken (EUR) * 550,000 18,095
32,590
Food & Staples Retailing 1.5%
CVS 455,000 19,119
Safeway * 376,000 9,528
28,647
Food Products 1.5%
Campbell Soup 565,000 15,187
General Mills 283,000 13,451
28,638
Household Products 0.6%
Clorox 202,600 10,896
10,896
Tobacco 0.5%
Altria Group 200,900 10,055
10,055
Total Consumer Staples 110,826
ENERGY 7.6%
Energy Equipment & Services 1.7%
Baker Hughes 557,000 20,971
Schlumberger 187,400 11,902
32,873
Oil & Gas 5.9%
Amerada Hess 333,700 26,426
ChevronTexaco 77,000 7,246
ConocoPhillips 142,600 10,879
Exxon Mobil 437,700 19,438
Marathon Oil 175,000 6,622
Royal Dutch Petroleum ADS 452,300 23,370
TotalFinaElf ADR 185,300 17,804
111,785
Total Energy 144,658
FINANCIALS 22.2%
Capital Markets 3.0%
Franklin Resources 300,000 15,024
Mellon Financial 600,000 17,598
Morgan Stanley 470,900 24,849
57,471
Commercial Banks 6.6%
Bank of America 370,000 31,309
Bank One 389,600 19,870
Comerica 309,000 16,958
Huntington Bancshares 610,000 13,969
Royal Bank of Scotland Group (GBP) 650,000 18,713
U.S. Bancorp 870,000 23,977
124,796
Consumer Finance 1.2%
American Express 428,000 21,991
21,991
Diversified Financial Services 2.4%
Citigroup 238,000 11,067
J.P. Morgan Chase 450,000 17,447
Principal Financial Group 516,600 17,967
46,481
Insurance 7.1%
Berkshire Hathaway, Class A * 175 15,566
Genworth Financial, Class A * 865,000 19,852
Hartford Financial Services 275,000 18,903
Marsh & McLennan 430,000 19,513
Prudential 243,200 11,302
SAFECO 415,400 18,278
Saint Paul Companies 526,980 21,364
UnumProvident 700,000 11,130
135,908
Thrifts & Mortgage Finance 1.9%
Freddie Mac 298,900 18,920
Radian Group 349,600 16,746
35,666
Total Financials 422,313
HEALTH CARE 7.1%
Biotechnology 0.5%
MedImmune * 400,000 9,360
9,360
Health Care Equipment & Supplies 0.9%
Medtronic 364,800 17,773
17,773
Health Care Providers & Services 0.7%
CIGNA 202,600 13,941
13,941
Pharmaceuticals 5.0%
Bristol-Myers Squibb 475,000 11,638
Johnson & Johnson 380,000 21,166
Merck 604,300 28,704
Schering-Plough 810,600 14,980
Wyeth 515,000 18,622
95,110
Total Health Care 136,184
INDUSTRIALS & BUSINESS SERVICES 16.1%
Aerospace & Defense 4.8%
Honeywell International 709,300 25,982
Lockheed Martin 456,000 23,748
Raytheon 557,300 19,934
Rockwell Collins 640,000 21,325
90,989
Air Freight & Logistics 1.0%
CNF 433,900 18,033
18,033
Airlines 0.2%
Delta * 500,000 3,560
3,560
Commercial Services & Supplies 1.0%
Waste Management 633,300 19,411
19,411
Electrical Equipment 1.1%
Cooper Industries, Class A 355,200 21,102
21,102
Industrial Conglomerates 4.1%
GE 1,600,000 51,840
Tyco International 790,000 26,181
78,021
Machinery 1.7%
Eaton 255,000 16,509
Illinois Tool Works 91,200 8,745
Pall 300,000 7,857
33,111
Road & Rail 2.2%
CSX 570,500 18,695
Norfolk Southern 120,000 3,183
Union Pacific 333,900 19,850
41,728
Total Industrials & Business Services 305,955
INFORMATION TECHNOLOGY 4.7%
Communications Equipment 1.3%
Motorola 875,000 15,969
Nokia ADR 635,000 9,233
25,202
Computer & Peripherals 1.2%
Hewlett-Packard 1,015,000 21,416
21,416
IT Services 0.3%
Electronic Data Systems 300,000 5,745
5,745
Semiconductor & Semiconductor Equipment 0.4%
Texas Instruments 325,000 7,859
7,859
Software 1.5%
Microsoft 1,000,000 28,560
28,560
Total Information Technology 88,782
MATERIALS 7.3%
Chemicals 2.3%
DuPont 460,000 20,433
Great Lakes Chemical 625,000 16,913
Hercules * 500,000 6,095
43,441
Metals & Mining 1.9%
Alcoa 394,200 13,020
Nucor 310,000 23,796
36,816
Paper & Forest Products 3.1%
Bowater 400,000 16,636
International Paper 505,000 22,573
MeadWestvaco 661,300 19,436
58,645
Total Materials 138,902
TELECOMMUNICATION SERVICES 2.8%
Diversified Telecommunication Services 2.8%
Alltel 248,100 12,559
MCI * 335,090 4,835
Qwest Communications International * 4,600,000 16,514
Sprint 1,075,000 18,920
Total Telecommunication Services 52,828
UTILITIES 3.0%
Electric Utilities 1.4%
FirstEnergy 450,000 16,834
Pinnacle West Capital 253,300 10,231
27,065
Gas Utilities 0.9%
NiSource 852,900 17,587
17,587
Multi-Utilities & Unregulated Power 0.7%
Duke Energy 660,000 13,392
13,392
Total Utilities 58,044
Total Common Stocks (Cost $1,628,246) 1,809,471
CONVERTIBLE PREFERRED STOCKS 0.3%
Genworth Financial 106,000 2,998
UnumProvident !!@ 140,000 3,473
Total Convertible Preferred Stocks (Cost $6,150) 6,471
CONVERTIBLE BONDS 0.1%
Delta Air Lines, 144A, 2.875%, 2/18/24 3,970,000 2,615
Total Convertible Bonds (Cost $3,806) 2,615
SHORT-TERM INVESTMENTS 4.2%
Money Market Fund 4.2%
T. Rowe Price Reserve Investment Fund, 1.16% # 79,264,994 79,265
Total Short-Term Investments (Cost $79,265) 79,265
Total Investments in Securities
99.6% of Net Assets (Cost $1,717,467) $ 1,897,822
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(1) Denominated in U.S. dollars unless otherwise noted
# Seven-day yield
* Non-income producing
!! Security contains restrictions as to public resale pursuant to the
Securities Act of 1933 and related rules - total value of such securities
at period-end amounts to $3,473 and represents 0.2% of net assets
@ Valued by the T. Rowe Price Valuation Committee, established 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 value of such securities at
period-end amounts to $2,615 and represents 0.1% of net assets
ADR American Depository Receipts
ADS American Depository Shares
EUR Euro
GBP British pound
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Value Fund
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Certified Semiannual Report (Unaudited) June 30, 2004
Statement of Assets and Liabilities
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(In thousands except shares and per share amounts)
Assets
Investments in securities, at value (cost $1,717,467) $ 1,897,822
Other assets 28,201
Total assets 1,926,023
Liabilities
Total liabilities 20,949
NET ASSETS $ 1,905,074
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Net Assets Consist of:
Undistributed net investment income (loss) $ 7,217
Undistributed net realized gain (loss) (17,106)
Net unrealized gain (loss) 180,357
Paid-in-capital applicable to 90,731,971 shares
of$0.0001 par value capital stock outstanding;
1,000,000,000 shares authorized 1,734,606
NET ASSETS $ 1,905,074
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NET ASSET VALUE PER SHARE
Investor Class
($1,811,549,574/86,258,309 shares outstanding) $ 21.00
----------------
Advisor Class
($93,524,134/4,473,662 shares outstanding) $ 20.91
----------------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Value Fund
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Certified Semiannual Report (Unaudited)
Statement of Operations
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($ 000s)
6 Months
Ended
6/30/04
Investment Income (Loss)
Income
Dividend $ 14,816
Interest 48
Total income 14,864
Expenses
Investment management 5,678
Shareholder servicing
Investor Class 2,044
Advisor Class 45
Rule (12b-1) - Advisor Class 107
Custody and accounting 84
Prospectus and shareholder reports
Investor Class 37
Advisor Class 3
Registration 40
Legal and audit 10
Directors 4
Miscellaneous 1
Total expenses 8,053
Expenses paid indirectly (2)
Net expenses 8,051
Net investment income (loss) 6,813
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 23,358
Foreign currency transactions (36)
Net realized gain (loss) 23,322
Change in net unrealized gain (loss)
Securities 53,755
Other assets and liabilities
denominated in foreign currencies 2
Change in net unrealized gain (loss) 53,757
Net realized and unrealized gain (loss) 77,079
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 83,892
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The accompanying notes are an integral part of these financial statements.
T. Rowe Price Value Fund
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Certified Semiannual Report (Unaudited)
Statement of Changes in Net Assets
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($ 000s)
6 Months Year
Ended Ended
6/30/04 12/31/03
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 6,813 $ 13,750
Net realized gain (loss) 23,322 (40,433)
Change in net unrealized gain (loss) 53,757 382,528
Increase (decrease) in net
assets from operations 83,892 355,845
Distributions to shareholders
Net investment income
Investor Class - (14,543)
Advisor Class - (746)
Net realized gain
Investor Class - (727)
Advisor Class - (38)
Decrease in net assets from distributions - (16,054)
Capital share transactions *
Shares sold
Investor Class 408,844 380,384
Advisor Class 23,023 23,634
Distributions reinvested
Investor Class - 14,900
Advisor Class - 782
Shares redeemed
Investor Class (158,882) (379,074)
Advisor Class (7,108) (12,581)
Increase (decrease) in net assets
from capital share transactions 265,877 28,045
Net Assets
Increase (decrease) during period 349,769 367,836
Beginning of period 1,555,305 1,187,469
End of period $ 1,905,074 $ 1,555,305
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(Including undistributed net investment
income of $7,217 at 6/30/04 and $404 at
12/31/03)
T. Rowe Price Value Fund
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Certified Semiannual Report (Unaudited)
Statement of Changes in Net Assets
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($ 000s)
6 Months Year
Ended Ended
6/30/04 12/31/03
*Share information
Shares sold
Investor Class 19,973 22,359
Advisor Class 1,124 1,370
Distributions reinvested
Investor Class - 774
Advisor Class - 41
Shares redeemed
Investor Class (7,754) (22,388)
Advisor Class (350) (750)
Increase (decrease) in shares outstanding 12,993 1,406
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Value Fund
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Certified Semiannual Report (Unaudited) June 30, 2004
Notes to Financial Statements
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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price 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 to provide long-term capital appreciation by
investing in common stocks believed to be undervalued. Income is a secondary
objective. The fund has two classes of shares: the Value Fund original share
class, referred to in this report as the Investor Class, offered since September
30, 1994, and Value Fund--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, shareholder
servicing, and/or 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, for certain markets, the official closing price at
the time the valuations are made, except for OTC Bulletin Board securities,
which are valued at the mean of the latest bid and asked prices. 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 asked 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.
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 close of trading on the NYSE. If the fund
determines that developments between the close of a foreign market and the close
of the NYSE will, in its judgment, materially affect the value of some or all of
its portfolio securities, which in turn will affect the fund's share price, the
fund will adjust the previous closing prices to reflect the 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. A
fund may also fair value securities in other situations, such as when a
particular foreign market is closed but the fund is open. In deciding whether to
make fair value adjustments, the fund reviews a variety of factors, including
developments in foreign markets, the performance of U.S. securities markets, and
the performance of instruments trading in U. S. markets that represent foreign
securities and baskets of foreign securities. The fund uses outside pricing
services to provide it with closing market prices and information used for
adjusting those prices. The fund cannot predict how often it will use closing
prices and how often it will adjust those prices. As a means of evaluating its
fair value process, the fund routinely compares closing market prices, the next
day's opening prices in the same markets, and adjusted prices.
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 asked 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, shareholder servicing, and/or certain
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.
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 $43,000 for the
six months ended June 30, 2004. 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.
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. Distributions to shareholders are
recorded on the ex-dividend date. 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.
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
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $395,569,000 and $150,144,000, respectively, for the six months ended
June 30, 2004.
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 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. The amount and character of
tax-basis distributions and composition of net assets are finalized at fiscal
year-end; accordingly, tax-basis balances have not been determined as of June
30, 2004.
The fund intends to retain realized gains to the extent of available capital
loss carryforwards. As of December 31, 2003, the fund had $40,422,000 of unused
capital loss carryforwards, of which $40,422,000 expire in 2011.
At June 30, 2004, the cost of investments for federal income tax purposes was
$1,717,467,000. Net unrealized gain aggregated $180,357,000 at period-end, of
which $290,482,000 related to appreciated investments and $110,125,000 related
to depreciated investments.
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 June 30, 2004,
the effective annual group fee rate was 0.31%, and investment management fee
payable totaled $1,002,000.
The Advisor Class is also subject to a contractual expense limitation through
April 30, 2006. 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 1.10%. Through April 30, 2008, 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 six months ended June 30, 2004, 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 recordkeeping services for certain retirement accounts
invested in the Investor Class. Expenses incurred pursuant to these service
agreements totaled $1,158,000 for the six months ended June 30, 2004, of which
$211,000 was payable at period-end.
Additionally, the fund is one of several mutual funds in which certain college
savings plans managed by Price Associates may invest. As approved by the fund's
Board of Directors, shareholder servicing costs associated with each college
savings plan are borne by the fund in proportion to the average daily value of
its shares owned by the college savings plan. For the six months ended June 30,
2004, the fund was charged $122,000 for shareholder servicing costs related to
the college savings plans, of which $90,000 was for services provided by Price
and $32,000 was payable at period-end. At June 30, 2004, approximately 4.1% of
the outstanding shares of the Investor Class were held by college savings plans.
The fund is also one of several mutual funds sponsored by Price Associates
(underlying Price funds) in which the T. Rowe Price Spectrum Funds (Spectrum
Funds) and T. Rowe Price Retirement Funds (Retirement Funds) may invest. Neither
the Spectrum Funds nor the Retirement Funds invest in the underlying Price funds
for the purpose of exercising management or control. Pursuant to separate,
special servicing agreements, expenses associated with the operation of the
Spectrum and Retirement Funds are borne by each underlying Price fund to the
extent of
estimated savings to it and in proportion to the average daily value of its
shares owned by the Spectrum and Retirement Funds, respectively. Expenses
allocated under these agreements are reflected as shareholder servicing expenses
in the accompanying financial statements. For the six months ended June 30,
2004, the fund was allocated $1,000 of Spectrum Funds' expenses and $400,000 of
Retirement Funds' expenses. Of these amounts, $270,000 related to services
provided by Price and $83,000 was payable at period-end. At June 30, 2004,
approximately 1.6% of the outstanding shares of the Investor Class were held by
the Spectrum Funds and 14.0% were held by the Retirement Funds.
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 to mutual funds, trusts,
and other accounts managed by Price Associates and/or its affiliates, and are
not available for direct purchase by members of the public. The Reserve Funds
pay no investment management fees. During the six months ended June 30, 2004,
dividend income from the Reserve Funds totaled $419,000.
T. Rowe Price Value Fund
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Certified Semiannual Report
Information on Proxy Voting
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A description of the policies and procedures that the T. Rowe Price 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.
Item 2. Code of Ethics.
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 is filed as an
exhibit to the registrant's annual Form N-CSR. No substantive amendments were
approved or waivers were granted to this code of ethics during the registrant's
most recent fiscal half-year.
Item 3. Audit Committee Financial Expert.
Disclosure required in registrant's annual Form N-CSR.
Item 4. Principal Accountant Fees and Services.
Disclosure required in registrant's annual Form N-CSR.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Not applicable. The complete schedule of investments is included in Item 1 of
this Form N-CSR.
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. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. 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 11. Exhibits.
(a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is filed
with the registrant's annual Form N-CSR.
(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.
(3) Written solicitation to repurchase securities issued by closed-end
companies: not applicable.
(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 Value Fund, Inc.
By: /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date: August 16, 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: August 16, 2004
By: /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date: August 16, 2004