Item 1. Report to Shareholders
DECEMBER 31, 2004
VALUE FUND
Annual Report
T. ROWE PRICE
The views and opinions in this report were current as of December 31, 2004. They
are not guarantees of performance or investment results and should not be taken
as investment advice. Investment decisions reflect a variety of factors, and the
managers reserve the right to change their views about individual stocks,
sectors, and the markets at any time. As a result, the views expressed should
not be relied upon as a forecast of the fund's future investment intent. The
report is certified under the Sarbanes-Oxley Act of 2002, which requires mutual
funds and other public companies to affirm that, to the best of their knowledge,
the information in their financial reports is fairly and accurately stated in
all material respects.
REPORTS ON THE WEB
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account at troweprice.com for more information.
T. Rowe Price Value Fund
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Fellow Shareholders
Expect the unexpected. In many ways, this phrase sums up market behavior for
2004. Going into the year, many observers expected interest rates to rise
substantially, crude oil prices to fall, and the stock market to have muted
annual returns. Instead, interest rates held steady, crude oil prices surged
through most of the year, and the S&P 500 Stock Index rose 10.88%. Most of the
increase in the S&P occurred late in the year, with the market rising 7.59% in
November and December as investor worry and uncertainty about the U.S.
presidential election abated with the narrow but clear victory of President
Bush. Your fund had another solid year of performance, returning 15.36% for the
year. Even with the recent bear market, your fund has returned 14.78% on an
annualized basis since its inception in September 1994.
Performance Comparison
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Periods Ended 12/31/04 6 Months 12 Months
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Value Fund 9.92% 15.36%
Value Fund-Advisor Class 9.82 15.22
S&P 500 Stock Index 7.19 10.88
Lipper Multi-Cap Value Funds Index 9.86 14.91
We are also pleased with the fund's relative performance for the year as returns
for the Value Fund exceeded not only the S&P 500 but also its Lipper benchmark
of similar funds. Much of this outperformance was as a result of strong stock
selection rather than sector selection. These results are consistent with our
focus on investing on a bottom-up basis with particular care given to finding
good companies trading at opportune valuation levels. Please see the Performance
Comparison table for a more detailed quantitative analysis of performance.
YEAR-END DISTRIBUTION
On December 13, your Board of Trustees declared an annual income dividend of
$0.18 per share. These distributions were paid on December 15 to shareholders of
record on December 13, 2004, and you should have already received your check or
statement reflecting them.
PORTFOLIO REVIEW
Energy was the best-performing sector for 2004, and it is no surprise that
several energy companies including Total, Amerada Hess, Statoil,
and Baker Hughes were all strong contributors to your fund's performance for the
year. The industrials sector posted good performance in the period due to a
rebound of economic activity. CNF, a supply chain management company, was the
beneficiary of both strong demand and increased pricing rates in the trucking
industry. Rockwell Collins benefited from a rebound in the commercial aerospace
market, while Tyco performed well as the market focused more on the cash-flow
generation capabilities of the company and less on the corporate scandals of
yesteryear. Investments in select financial companies such as Genworth Financial
and Charles Schwab also contributed positively to our strong results. Our
investment in the telecommunication company Sprint contributed positively to
performance as the company benefited from growth in its wireless unit and a
stabilization in its long-distance business. In addition, the company recently
announced the acquisition of Nextel; this combination is likely to generate
significant cost synergies and should be a catalyst for management to unlock
hidden value at each entity. (Please refer to our portfolio of investments for a
complete listing of our holdings and the amount each represents of the
portfolio.)
Counterbalancing these holdings to some extent were Merck and Marsh & McLennan.
Merck came under pressure as a result of withdrawing its Vioxx arthritis drug
from the market. Marsh & McLennan declined dramatically after New York Attorney
General Eliot Spitzer accused the company of missteps in its insurance brokerage
division. In addition, our overweighting of health care was a drag on
performance and offset good stock selection in this sector, including our
investments in Cardinal Health and MedImmune. We are continuing to add to our
health care holdings as we still see attractive valuations in this sector.
PORTFOLIO STRATEGY AND CHANGES
To place our portfolio changes in perspective, we believe it is important to
review the investment strategy we use in managing your fund. Our focus is to
invest in companies with both attractive relative valuations and favorable
long-term fundamental characteristics. We view ourselves as investors, not
speculators, and have a longer-term time horizon when we make our investment
decisions. Indeed, our portfolio turnover has been consistently less than the
average of our peers.
As the market has risen over the past year, it has become increasingly difficult
to find appealing stocks from a value perspective. That said, opportunities
exist in select areas, and during the year we have seen
investment opportunities in higher-quality companies with relative valuation
attractiveness, such as Coca-Cola and State Street Bank. Also, we have seen
investment opportunities in European energy companies such as Total and Statoil
and have aggressively added to our positions in these companies. When we compare
the valuation appeal of American and European oil companies, we are struck by
how the European firms are more attractively valued and have a more robust
opportunity set given their access to new exploration frontiers in West Africa,
the former Soviet Union, and other promising regions.
Sector Diversification
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Percent of Percent of
Net Assets Net Assets
6/30/04 12/31/04
- --------------------------------------------------------------------------------
Financials 22.5% 22.3%
Consumer Discretionary 18.4 19.4
Industrials and Business Services 16.2 13.1
Health Care 7.1 8.4
Energy 7.6 7.8
Materials 7.3 7.3
Consumer Staples 5.8 6.9
Information Technology 4.7 5.3
Telecommunications Services 2.8 3.2
Utilities 3.0 2.9
Other and Reserves 4.6 3.4
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Total 100.0% 100.0%
Historical weightings reflect current industry/sector classifications.
We have also focused our investment activity on swapping one company whose
valuation merits have faded for another with more appealing characteristics.
Accordingly, over the past year, we traded out of Huntington Bancshares to
establish a position in State Street Bank. We took advantage of significant
stock price appreciation in Motorola and swapped some of our position into
Nokia. Also, we trimmed our position in Cooper Industries and used the proceeds
to add to our holdings in GE, which over the course of the year became the
largest position in your fund. In our view, all of these exchanges represent an
upgrade in quality (defined by either the integrity of the company's balance
sheet or its business model) within the same industry. The Major Portfolio
Changes table at the end of this commentary highlights our purchase and sale
activity during the past six months and year.
OUTLOOK
The only comment about the upcoming year that we can make with any degree of
certainty is that at some point we will be surprised by the
events that unfold in front of us. The last two years have been extremely good
ones for the market as the S&P 500 is up 62.28% (with dividends reinvested) from
its lows in October 2002. The main question to ask is, where does the market go
from here? Our sense is that the economy will continue its gradual recovery and
continue to support mild corporate earnings growth. However, with the market
trading at a price-to-earnings ratio of 17 times 2005 estimated earnings, it is
difficult to make a strong case for multiple expansion given the specter of
rising interest rates and the structural weight of the budget and trade
deficits. Therefore, we would expect to see equity markets rise in line with
earnings growth, which suggests a more muted return environment for the market
in 2005. In this type of market, we believe that equity returns will be
generated more by superior stock selection rather than by a broad thematic
approach to investing. We believe that this environment should be positive for
your fund's performance given T. Rowe Price's organizational focus on in-house
proprietary research and our bottom-up style of investing.
While we remain cautiously optimistic about the stock market's prospects for the
year, our primary discipline is to follow the course we have taken since the
fund's inception more than 10 years ago: selecting stocks with valuation appeal,
sound fundamentals, and reasonable balance sheet integrity. As always, we will
focus our efforts on making sound investment decisions in our ongoing attempt to
enhance shareholder value.
Respectfully submitted,
John D. Linehan
President of the fund and chairman of its Investment Advisory Committee
January 20, 2005
The committee chairman has day-to-day responsibility for managing the portfolio
and works with committee members in developing and executing the fund's
investment program.
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Risks of Investing in the Fund
Value investors seek to invest in companies whose stock prices are low in
relation to their real worth or future prospects. By identifying companies whose
stocks are currently out of favor or misunderstood, value investors hope to
realize significant appreciation as other investors recognize the stock's
intrinsic value and the price rises accordingly. The value approach carries the
risk that the market will not recognize a security's intrinsic value for a long
time, or that a stock judged to be undervalued may actually be appropriately
priced.
Glossary
Lipper Index: An index of mutual fund performance returns for specified periods
in defined categories as tracked by Lipper Inc.
S&P 500 Stock Index: A market cap-weighted index of 500 widely held stocks often
used as a proxy for the overall stock market. Performance is reported on a
total-return basis.
Price/earnings ratio: Calculated by dividing a stock's market value per share by
the company's earnings per share for the past 12 months or by expected earnings
for the coming year.
T. Rowe Price Value Fund
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Portfolio Highlights
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
12/31/04
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GE 2.6%
Comcast 1.6
J.P. Morgan Chase 1.6
Total 1.6
Liberty Media 1.5
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Bank of America 1.4
Coca-Cola 1.4
Union Pacific 1.4
Honeywell International 1.4
International Paper 1.4
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Time Warner 1.3
DuPont 1.3
Microsoft 1.3
Marsh & McLennan 1.2
Royal Dutch Petroleum 1.2
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CSX 1.2
Sprint 1.2
State Street 1.2
NiSource 1.2
Merck 1.2
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St. Paul Companies 1.2
Newell Rubbermaid 1.2
Baker Hughes 1.2
Tyco International 1.1
Genworth Financial 1.1
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Total 34.0%
Note: Table excludes investments in T. Rowe Price Reserve Investment Fund.
T. Rowe Price Value Fund
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Portfolio Highlights
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MAJOR PORTFOLIO CHANGES
Listed in descending order of size
6 Months Ended 12/31/04
Largest Purchases Largest Sales
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Coca-Cola * CNF **
State Street * Huntington Bancshares **
Statoil ASA * Amerada Hess
Cardinal Health * Ford Motor **
GM * UnumProvident (common) **
Total Illinois Tool Works **
Marsh & McLennan Cooper Industries
Charles Schwab * ChevronTexaco **
Liberty Media Marathon Oil **
International Paper Electronic Data Systems **
12 Months Ended 12/31/04
Largest Purchases Largest Sales
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GE CNF **
Coca-Cola * Amerada Hess
State Street * Toys "R" Us **
Family Dollar Stores * Huntington Bancshares **
Total Hilton **
CSX * TXU **
Royal Bank of Scotland * ChevronTexaco **
Marsh & McLennan Cooper Industries
Statoil ASA * Norfolk Southern **
Radian * Motorola
* Position added
** Position eliminated
T. Rowe Price Value Fund
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Growth of $10,000
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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]
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VALUE FUND
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As of 12/31/04
S&P 500 Stock Index $ 31,258
Lipper Multi-Cap Value Funds Index $ 31,696
Value Fund $ 39,858
S&P 500 Lipper Multi-Cap Value
Stock Index Value Funds Index Fund
12/94 $ 10,000 $ 10,000 $ 10,000
12/95 13,758 13,101 13,985
12/96 16,917 15,851 17,972
12/97 22,561 20,117 23,228
12/98 29,008 21,429 24,819
12/99 35,112 22,702 27,092
12/00 31,915 24,889 31,359
12/01 28,122 25,212 31,861
12/02 21,907 20,773 26,577
12/03 28,190 27,583 34,551
12/04 31,258 31,696 39,858
Note: Performance for Advisor Class shares will vary due to the differing fee
structure. See returns table on the next page.
T. Rowe Price Value Fund
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Average Annual Compound Total Return
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This table shows how the fund and its benchmarks would have performed if their
actual (or cumulative) returns for the periods shown had been earned at a
constant rate.
Since Inception
Periods Ended 12/31/04 1 Year 5 Years 10 Years Inception Date
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Value Fund 15.36% 8.03% 14.83% - 9/30/94
S&P 500 Stock Index 10.88 -2.30 12.07 -
Lipper Multi-Cap Value
Funds Index 14.91 6.90 12.23 -
Value Fund-Advisor Class 15.22 - - 8.23% 3/31/00
S&P 500 Stock Index 10.88 - - -2.88
Lipper Multi-Cap Value
Funds Index 14.91 - - 7.23
Current performance may be higher or lower than the quoted past performance,
which cannot guarantee future results. Share price, principal value, and return
will vary, and you may have a gain or loss when you sell your shares. For the
most recent month-end performance information, please visit our Web site
(troweprice.com) or contact a T. Rowe Price representative at 1-800-225-5132.
Average annual total return figures include changes in principal value,
reinvested dividends, and capital gain distributions. Returns do not reflect
taxes that the shareholder may pay on fund distributions or the redemption of
fund shares. When assessing performance, investors should consider both short-
and long-term returns.
T. Rowe Price Value Fund
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Fund Expense Example
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As a mutual fund shareholder, you may incur two types of costs: (1) transaction
costs such as redemption fees or sales loads and (2) ongoing costs, including
management fees, distribution and service (12b-1) fees, and other fund expenses.
The following example is intended to help you understand your ongoing costs (in
dollars) of investing in the fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 invested at the beginning of the most recent six-month period and held
for the entire period.
Please note that the fund has two share classes: The original share class
("investor class") charges no distribution and service (12b-1) fee. Advisor
Class shares are offered only through unaffiliated brokers and other financial
intermediaries and charge a 0.25% 12b-1 fee. Each share class is presented
separately in the table.
Actual Expenses
The first line of the following table ("Actual") provides information about
actual account values and expenses based on the fund's actual returns. You may
use the information in this line, together with your account balance, to
estimate the expenses that you paid over the period. Simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number in the first line under the heading
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
Hypothetical Example for Comparison Purposes
The information on the second line of the table ("Hypothetical") is based on
hypothetical account values and expenses derived from the fund's actual expense
ratio and an assumed 5% per year rate of return before expenses (not the fund's
actual return). You may compare the ongoing costs of investing in the fund with
other funds by contrasting this 5% hypothetical example and the 5% hypothetical
examples that appear in the shareholder reports of the other funds. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period.
Note: T. Rowe Price charges an annual small-account maintenance fee of $10,
generally for accounts with less than $2,000 ($500 for UGMA/UTMA). The fee is
waived for any investor whose T. Rowe Price mutual fund accounts total $25,000
or more, accounts employing automatic investing, and IRAs and other retirement
plan accounts that utilize a prototype plan sponsored by T. Rowe Price (although
a separate custodial or administrative fee may apply to such accounts). This fee
is not included in the accompanying tables. If you are subject to the fee, keep
it in mind when you are estimating the ongoing expenses of investing in the fund
and when comparing the expenses of this fund with other funds.
You should also be aware that the expenses shown in the table highlight only
your ongoing costs and do not reflect any transaction costs, such as redemption
fees or sales loads. Therefore, the second line of the table is useful in
comparing ongoing costs only, and will not help you determine the relative total
costs of owning different funds. To the extent a fund charges transaction costs,
however, the total cost of owning that fund is higher.
T. Rowe Price Value Fund
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Beginning Ending Expenses Paid
Account Value Account Value During Period*
7/1/04 12/31/04 7/1/04 to 12/31/04
- --------------------------------------------------------------------------------
Investor Class
Actual $1,000 $1,099.20 $4.85
Hypothetical (assumes 5%
return before expenses) 1,000 1,020.51 4.67
Advisor Class
Actual 1,000 1,098.20 5.54
Hypothetical (assumes 5%
return before expenses) 1,000 1,019.86 5.33
*Expenses are equal to the fund's annualized expense ratio for the six-month
period, multiplied by the average account value over the period, multiplied by
the number of days in the most recent fiscal half year (184) divided by the
days in the year (366) to reflect the half-year period. The annualized expense
ratio of the investor class was 0.92%; the Advisor Class was 1.05%.
T. Rowe Price Value Fund
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Financial Highlights For a share outstanding throughout each period
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Investor Class
Year
Ended
12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
NET ASSET VALUE
Beginning of period $ 20.01 $ 15.56 $ 18.88 $ 19.15 $ 17.50
Investment activities
Net investment income (loss) 0.19 0.18 0.18 0.17 0.24
Net realized and
unrealized gain (loss) 2.88 4.48 (3.31) 0.13** 2.48
Total from
investment activities 3.07 4.66 (3.13) 0.30 2.72
Distributions
Net investment income (0.18) (0.20) (0.15) (0.17) (0.23)
Net realized gain - (0.01) (0.04) (0.40) (0.84)
Total distributions (0.18) (0.21) (0.19) (0.57) (1.07)
NET ASSET VALUE
End of period $ 22.90 $ 20.01 $ 15.56 $ 18.88 $ 19.15
-------------------------------------------------
Ratios/Supplemental Data
Total return^ 15.36% 30.00% (16.58)% 1.60% 15.75%
Ratio of total expenses to
average net assets 0.93% 0.97% 0.95% 0.94% 0.91%
Ratio of net investment
income (loss) to average
net assets 1.10% 1.06% 1.01% 0.93% 1.38%
Portfolio turnover rate 17.0% 30.6% 29.6% 42.2% 55.9%
Net assets, end of period
(in millions) $ 2,429 $ 1,482 $ 1,140 $ 1,322 $ 989
^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.
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Value Fund
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Financial Highlights For a share outstanding throughout each period
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Advisor Class
Year 3/31/00
Ended Through
12/31/04 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) 0.21 0.15 0.10 0.10 0.17*
Net realized and
unrealized gain (loss) 2.82 4.48 (3.24) 0.17** 2.45
Total from
investment activities 3.03 4.63 (3.14) 0.27 2.62
Distributions
Net investment income (0.16) (0.20) (0.15) (0.17) (0.21)
Net realized gain - (0.01) (0.04) (0.40) (0.84)
Total distributions (0.16) (0.21) (0.19) (0.57) (1.05)
NET ASSET VALUE
End of period $ 22.80 $ 19.93 $ 15.51 $ 18.84 $ 19.14
-------------------------------------------------
Ratios/Supplemental Data
Total return^ 15.22% 29.91% (16.67)% 1.45% 15.11%*
Ratio of total expenses to
average net assets 1.05% 1.04% 1.08% 1.06% 1.10%*!
Ratio of net investment
income (loss) to average
net assets 0.96% 0.99% 1.08% 0.78% 1.04%*!
Portfolio turnover rate 17.0% 30.6% 29.6% 42.2% 55.9%
Net assets, end of period
(in thousands) $114,496 $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% contractual 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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December 31, 2004
Portfolio of Investments (1) Shares/$ Par Value
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(Cost and value in $ 000s)
COMMON STOCKS 95.5%
CONSUMER DISCRETIONARY 19.3%
Automobiles 1.3%
GM 450,000 18,027
Harley-Davidson 260,000 15,795
33,822
Hotels, Restaurants & Leisure 1.7%
Fairmont Hotels 790,000 27,365
McDonald's 460,000 14,748
42,113
Household Durables 2.8%
Fortune Brands 255,000 19,681
Newell Rubbermaid 1,220,000 29,512
Sony ADR 585,000 22,791
71,984
Leisure Equipment & Products 0.8%
Eastman Kodak 300,000 9,675
Hasbro 600,000 11,628
21,303
Media 10.1%
Cablevision Systems, Class A * 885,000 22,037
Comcast, Class A * 202,000 6,723
Comcast, Special Class A * 1,035,000 33,989
Disney 775,000 21,545
Dow Jones 548,400 23,614
Liberty Media, Class A * 3,500,000 38,430
Liberty Media International, Series A * 120,012 5,548
New York Times, Class A 635,000 25,908
Pearson (GBP) 740,000 8,910
Reuters (GBP) 1,755,000 12,693
Time Warner * 1,700,000 33,048
Viacom, Class B 655,000 23,836
256,281
Multiline Retail 2.2%
Family Dollar Stores 875,000 27,326
May Department Stores 950,000 27,930
55,256
Specialty Retail 0.4%
RadioShack 340,000 11,179
11,179
Total Consumer Discretionary 491,938
CONSUMER STAPLES 6.6%
Beverages 2.9%
Coca-Cola 845,000 35,178
Coca-Cola Enterprises 585,000 12,197
Heineken (EUR) 785,000 26,067
73,442
Food & Staples Retailing 1.0%
CVS 380,000 17,127
Safeway * 376,000 7,422
24,549
Food Products 1.7%
Campbell Soup 595,000 17,785
General Mills 540,000 26,843
44,628
Household Products 0.4%
Clorox 180,000 10,607
10,607
Tobacco 0.6%
Altria Group 250,000 15,275
15,275
Total Consumer Staples 168,501
ENERGY 7.8%
Energy Equipment & Services 1.8%
Baker Hughes 690,000 29,442
Schlumberger 240,000 16,068
45,510
Oil & Gas 6.0%
Amerada Hess 150,000 12,357
ConocoPhillips 215,000 18,668
ExxonMobil 515,000 26,399
Royal Dutch Petroleum ADS 540,000 30,985
Statoil ASA (NOK) 1,625,000 25,379
Total ADR 365,000 40,092
153,880
Total Energy 199,390
FINANCIALS 21.9%
Capital Markets 4.7%
Charles Schwab 1,525,000 18,239
Franklin Resources 270,000 18,806
Mellon Financial 635,000 19,755
Merrill Lynch 215,000 12,851
Morgan Stanley 370,000 20,542
State Street 610,000 29,963
120,156
Commercial Banks 4.3%
Bank of America 770,000 36,182
Comerica 298,700 18,227
Royal Bank of Scotland (GBP) 785,000 26,349
U.S. Bancorp 885,000 27,718
108,476
Consumer Finance 1.0%
American Express 438,000 24,690
24,690
Diversified Financial Services 3.5%
Citigroup 455,000 21,922
J.P. Morgan Chase 1,034,272 40,347
Principal Financial Group 660,000 27,020
89,289
Insurance 6.6%
Berkshire Hathaway, Class A * 270 23,733
Genworth Financial, Class A 930,000 25,110
Hartford Financial Services 395,000 27,378
Marsh & McLennan 965,000 31,749
Prudential 250,000 13,740
SAFECO 325,000 16,978
St. Paul Companies 805,000 29,841
168,529
Thrifts & Mortgage Finance 1.8%
Freddie Mac 280,000 20,636
Radian 451,000 24,011
44,647
Total Financials 555,787
HEALTH CARE 8.3%
Biotechnology 1.1%
Chiron * 150,000 4,999
MedImmune * 820,000 22,230
27,229
Health Care Equipment & Supplies 1.0%
Medtronic 510,000 25,332
25,332
Health Care Providers & Services 1.7%
Cardinal Health 455,000 26,458
CIGNA 210,000 17,130
43,588
Pharmaceuticals 4.5%
Bristol Myers Squibb 485,000 12,426
Johnson & Johnson 430,000 27,270
Merck 930,000 29,890
Schering-Plough 860,000 17,957
Wyeth 615,000 26,193
113,736
Total Health Care 209,885
INDUSTRIALS & BUSINESS SERVICES 13.0%
Aerospace & Defense 4.1%
Honeywell International 980,000 34,702
Lockheed Martin 476,000 26,442
Raytheon 577,300 22,416
Rockwell Collins 525,000 20,706
104,266
Airlines 0.0%
Delta * 200,000 1,496
1,496
Commercial Services & Supplies 1.1%
Waste Management 902,000 27,006
27,006
Electrical Equipment 0.6%
Cooper Industries, Class A 225,000 15,275
15,275
Industrial Conglomerates 3.7%
GE 1,810,000 66,065
Tyco International 805,000 28,771
94,836
Machinery 0.9%
Eaton 220,000 15,919
Pall 235,000 6,803
22,722
Road & Rail 2.6%
CSX 760,000 30,461
Union Pacific 520,000 34,970
65,431
Total Industrials & Business Services 331,032
INFORMATION TECHNOLOGY 5.3%
Communications Equipment 1.4%
Motorola 875,000 15,050
Nokia ADR 1,400,000 21,938
36,988
Computers & Peripherals 1.0%
Hewlett-Packard 1,160,000 24,325
24,325
Semiconductor & Semiconductor Equipment 1.2%
Freescale Semiconductor, Class B * 96,613 1,774
Intel 425,000 9,941
Texas Instruments 740,000 18,219
29,934
Software 1.7%
Microsoft 1,195,000 31,918
Synopsys * 585,000 11,478
43,396
Total Information Technology 134,643
MATERIALS 7.3%
Chemicals 2.3%
DuPont 655,000 32,128
Great Lakes Chemical 625,000 17,806
Hercules * 515,000 7,648
57,582
Metals & Mining 1.7%
Alcoa 455,000 14,296
Nucor 545,000 28,525
42,821
Paper & Forest Products 3.3%
Bowater 630,000 27,701
International Paper 820,000 34,440
MeadWestvaco 670,000 22,707
84,848
Total Materials 185,251
TELECOMMUNICATION SERVICES 3.2%
Diversified Telecommunication Services 3.2%
Alltel 260,000 15,278
MCI * 370,090 7,461
Qwest Communications * 4,760,000 21,134
Sprint 1,215,000 30,193
Telus (CAD) 198,600 5,979
Telus 52,800 1,526
Total Telecommunication Services 81,571
UTILITIES 2.8%
Electric Utilities 1.0%
FirstEnergy 455,000 17,977
Pinnacle West Capital 160,000 7,105
25,082
Gas Utilities 1.1%
NiSource 1,315,000 29,956
29,956
Multi-Utilities & Unregulated Power 0.7%
Duke Energy 685,000 17,351
17,351
Total Utilities 72,389
Total Common Stocks (Cost $2,061,251) 2,430,387
CONVERTIBLE PREFERRED STOCKS 0.9%
Fannie Mae * 42 4,448
Genworth Financial 106,000 3,433
Lehman Brothers 240,000 6,524
Schering-Plough 77,000 4,312
UnumProvident 140,000 4,248
Total Convertible Preferred Stocks (Cost $20,200) 22,965
CONVERTIBLE BONDS 0.1%
Delta Air Lines, 144A, 2.875%, 2/18/24 3,970,000 2,708
Total Convertible Bonds (Cost $3,809) 2,708
SHORT-TERM INVESTMENTS 6.0%
Money Market Fund 5.9%
T. Rowe Price Reserve Investment Fund, 2.28% #! 149,170,054 149,170
149,170
U.S. Treasury Obligations 0.1%
U.S. Treasury Bills, 1.702%, 1/27/05 2,750,000 2,747
2,747
Total Short-Term Investments (Cost $151,917) 151,917
Total Investments in Securities
102.5% of Net Assets (Cost $2,237,177) $2,607,977
----------
(1) Denominated in U.S. dollars unless otherwise noted
# Seven-day yield
* Non-income producing
! Affiliated company - See Note 4
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 $2,708 and represents 0.1% of net assets
ADR American Depository Receipts
ADS American Depository Shares
CAD Canadian dollar
EUR Euro
GBP British pound
NOK Norwegian krone
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
December 31, 2004
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
(In thousands except shares and per share amounts)
Assets
Investments in securities, at value
Affiliated companies (cost $149,170) $ 149,170
Non-affiliated companies (cost $2,088,007) 2,458,807
Total investments in securities 2,607,977
Other assets 40,778
Total assets 2,648,755
Liabilities
Total liabilities 105,570
NET ASSETS $ 2,543,185
------------------
Net Assets Consist of:
Undistributed net investment income (loss) $ 1,480
Undistributed net realized gain (loss) 8,267
Net unrealized gain (loss) 370,800
Paid-in-capital applicable to 111,066,369 shares of
$0.0001 par value capital stock outstanding;
1,000,000,000 shares authorized 2,162,638
NET ASSETS $ 2,543,185
------------------
NET ASSET VALUE PER SHARE
Investor Class
($2,428,688,629/106,044,948 shares outstanding) $ 22.90
------------------
Advisor Class
($114,496,259/5,021,421 shares outstanding) $ 22.80
------------------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
($ 000s)
Year
Ended
12/31/04
Investment Income (Loss)
Income
Dividend $ 39,150
Interest 122
Total income 39,272
Expenses
Investment management 12,876
Shareholder servicing
Investor Class 4,441
Advisor Class 96
Rule 12b-1 fees - Advisor Class 233
Custody and accounting 185
Prospectus and shareholder reports
Investor Class 102
Advisor Class 11
Registration 110
Legal and audit 19
Directors 8
Miscellaneous 17
Total expenses 18,098
Expenses paid indirectly (2)
Net expenses 18,096
Net investment income (loss) 21,176
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 46,338
Futures 2,466
Foreign currency transactions (102)
Net realized gain (loss) 48,702
Change in net unrealized gain (loss) on securities 244,200
Net realized and unrealized gain (loss) 292,902
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 314,078
-----------------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
($ 000s)
Year
Ended
12/31/04 12/31/03
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 21,176 $ 13,750
Net realized gain (loss) 48,702 (40,433)
Change in net unrealized gain (loss) 244,200 382,528
Increase (decrease) in net assets
from operations 314,078 355,845
Distributions to shareholders
Net investment income
Investor Class (18,954) (14,543)
Advisor Class (783) (746)
Net realized gain
Investor Class - (727)
Advisor Class - (38)
Decrease in net assets from distributions (19,737) (16,054)
Capital share transactions *
Shares sold
Investor Class 999,492 380,384
Advisor Class 38,354 23,634
Distributions reinvested
Investor Class 18,588 14,900
Advisor Class 752 782
Shares redeemed
Investor Class (352,114) (379,074)
Advisor Class (11,533) (12,581)
Increase (decrease) in net assets from
capital share transactions 693,539 28,045
Net Assets
Increase (decrease) during period 987,880 367,836
Beginning of period 1,555,305 1,187,469
End of period $ 2,543,185 $ 1,555,305
------------ ------------
(Including undistributed net investment income of
$1,480 at 12/31/04 and $404 at 12/31/03)
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
($ 000s)
Year
Ended
12/31/04 12/31/03
*Share information
Shares sold
Investor Class 47,814 22,359
Advisor Class 1,846 1,370
Distributions reinvested
Investor Class 829 774
Advisor Class 34 41
Shares redeemed
Investor Class (16,637) (22,388)
Advisor Class (559) (750)
Increase (decrease) in shares outstanding 33,327 1,406
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
December 31, 2004
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Value Fund, Inc. (the fund) is registered under the Investment
Company Act of 1940 (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 unaffiliated brokers and other
unaffiliated 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. Financial futures contracts are valued
at closing settlement prices.
Other investments, including restricted securities, 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,
invest-
ment 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 $117,000 for the
year ended December 31, 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. 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.
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. During the year ended December 31, 2004, the fund received a
one-time special dividend on a security held in its portfolio (Microsoft Corp.).
The dividend, which totaled $3,388,000, represents 8.7% of dividend income
reflected in the accompanying financial statements and is not expected to recur.
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.
Restricted Securities
The fund may invest in securities that are subject to legal or contractual
restrictions on resale. Although certain of these securities may be readily
sold, for example, under Rule 144A, others may be illiquid, and their sale may
involve substantial delays and additional costs, and prompt sale at an
acceptable price may be difficult.
Futures Contracts
During the year ended December 31, 2004, 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.
Other
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $985,238,000 and $315,290,000, respectively, for the year ended
December 31, 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 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, 2004 totaled $19,737,000 and
were characterized as ordinary income for tax purposes. At December 31, 2004,
the tax-basis components of net assets were as follows:
- --------------------------------------------------------------------------------
Unrealized appreciation $ 448,356,000
Unrealized depreciation (77,655,000)
Net unrealized appreciation (depreciation) 370,701,000
Undistributed ordinary income 1,570,000
Undistributed long-term capital gain 8,276,000
Paid-in capital 2,162,638,000
Net assets $ 2,543,185,000
-----------------
The fund intends to retain realized gains to the extent of available capital
loss carryforwards for federal income tax purposes. During the year ended
December 31, 2004, the fund utilized $40,422,000 of capital loss carryforwards.
For the year ended December 31, 2004, the fund recorded the following permanent
reclassifications to reflect tax character. Reclassifications to paid-in capital
relate primarily to 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 $ (363,000)
Undistributed net realized gain (7,000)
Paid-in capital 370,000
At December 31, 2004, the cost of investments for federal income tax purposes
was $2,237,276,000.
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,
2004, the effective annual group fee rate was 0.31%, and investment management
fee payable totaled $1,400,000.
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. Pursuant to this agreement, at December 31, 2004,
there were no amounts subject to repayment. For the year ended December 31,
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. For the year ended December 31, 2004, expenses
incurred pursuant to these service agreements were $73,000 for Price Associates,
$814,000 for T. Rowe Price Services, Inc., and $1,412,000 for T. Rowe Price
Retirement Plan Services, Inc. At period-end, a total of $217,000 of these
expenses was payable.
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 year ended December 31,
2004, the fund was charged $213,000 for shareholder servicing costs related to
the college savings plans, of which $158,000 was for services provided by Price
and $17,000 was payable at period-end. At December 31, 2004, approximately 3.8%
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 year ended December 31, 2004,
the fund was allocated $96,000 of Spectrum Funds' expenses and $1,103,000 of
Retirement Funds' expenses. Of these amounts, $836,000 related to services
provided by Price and $126,000 was payable at period-end. At December 31, 2004,
approximately 7.7% of the outstanding shares of the Investor Class were held by
the Spectrum Funds and 23% 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 and
affiliates of the fund. 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 year
ended December 31, 2004, dividend income from the Reserve Funds totaled
$1,426,000, and the value of shares of the Reserve Funds held at December 31,
2004 and December 31, 2003 was $149,170,000 and $58,570,000, respectively.
As of December 31, 2004, T. Rowe Price Group, Inc. and/or its wholly owned
subsidiaries owned 286,489 shares of the Investor Class, representing less than
1% of the fund's net assets.
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
Report of Independent Registered Public Accounting Firm
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
T. Rowe Price 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 Value Fund, Inc. (the
"Fund") at December 31, 2004, 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 the auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards 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, 2004 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 11, 2005
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
Tax Information (Unaudited) for the Tax Year Ended 12/31/04
- --------------------------------------------------------------------------------
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 $105,000 from long-term
capital gains, subject to the 15% rate gains category.
For taxable non-corporate shareholders, $21,167,000 of the fund's income
represents qualified dividend income subject to the 15% rate category.
For corporate shareholders, $21,167,000 of the fund's income qualifies for the
dividends-received deduction.
Information on Proxy Voting Policies, Procedures, and Records
- --------------------------------------------------------------------------------
A description of the policies and procedures used by T. Rowe Price funds and
portfolios to determine how to vote proxies relating to portfolio securities is
available in each fund's Statement of Additional Information, which you may
request by calling 1-800-225-5132 or by accessing the SEC's Web site,
www.sec.gov. The description of our proxy voting policies and procedures is also
available on our Web site, www.troweprice.com. To access it, click on the words
"Company Info" at the top of our homepage for individual investors. Then, in the
window that appears, click on the "Proxy Voting Policy" navigation button in the
top left corner.
Each fund's most recent annual proxy voting record is available on our Web site
and through the SEC's Web site. To access it through our Web site, follow the
directions above, then click on the words "Proxy Voting Record" at the bottom of
the Proxy Voting Policy page.
How to Obtain Quarterly Portfolio Holdings
- --------------------------------------------------------------------------------
The fund files a complete schedule of portfolio holdings with the Securities and
Exchange Commission for the first and third quarters of each fiscal year on Form
N-Q. The fund's Form N-Q is available electronically on the SEC's Web site
(www.sec.gov); hard copies may be reviewed and copied at the SEC's Public
Reference Room, 450 Fifth St. N.W., Washington, DC 20549. For more information
on the Public Reference Room, call 1-800-SEC-0330.
T. Rowe Price Value Fund
- --------------------------------------------------------------------------------
About the Fund's Directors and Officers
- --------------------------------------------------------------------------------
Your fund is governed by a Board of Directors that meets regularly to review
investments, performance, compliance matters, advisory fees, expenses, and other
business affairs, 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
(Year of Birth) Principal Occupation(s) During Past 5 Years
Year Elected * and Directorships of Other Public Companies
Anthony W. Deering Director, Chairman of the Board, President, and
(1945) 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
(1943) acquisition and management advisory firm
1994
David K. Fagin Director, Golden Star Resources Ltd., Canyon
(1938) 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
(1943) Client Services, Marsh Inc. (1999-2003); Managing
2003 Director and Head of International Private
Banking, Bankers Trust (1996-1999); Director, Eli
Lilly and Company and Georgia Pacific
(5/04 to present)
F. Pierce Linaweaver President, F. Pierce Linaweaver & Associates,
(1934) Inc., consulting environmental and civil engineers
2001
John G. Schreiber Owner/President, Centaur Capital Partners, Inc., a
(1946) real estate investment company; Partner,
2001 Blackstone Real Estate Advisors, L.P.; Director,
AMLI Residential Properties Trust and The Rouse
Company, real estate developers
*Each independent director oversees 112 T. Rowe Price portfolios and serves
until retirement, resignation, or election of a successor.
Inside Directors
Name
(Year of Birth)
Year Elected *
[Number of T. Rowe Price Principal Occupation(s) During Past 5 Years
Portfolios Overseen] and Directorships of Other Public Companies
James A.C. Kennedy, CFA Director and Vice President, T. Rowe Price and
(1953) T. Rowe Price Group, Inc.; Director, T. Rowe
1997 Price Global Investment Services Limited and
[43] T. Rowe Price International, Inc.
James S. Riepe Director and Vice President, T. Rowe Price; Vice
(1943) Chairman of the Board, Director, and Vice
1994 President, T. Rowe Price Group, Inc.; Chairman of
[112] 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, Value Fund
*Each inside director serves until retirement, resignation, or election of a
successor.
Officers
Name (Year of Birth)
Title and Fund(s) Served Principal Occupation(s)
Jeffrey W. Arricale, CPA (1971) Vice President, T. Rowe Price and
Vice President, Value Fund T. Rowe Price Group, Inc.; formerly
student, The Wharton School, University
of Pennsylvania (to 2001); Manager,
Assurance, KPMG LLP (to 1999)
Stephen W. Boesel (1944) Vice President, T. Rowe Price, T. Rowe
Vice President, Value Fund Price Group, Inc., and T. Rowe Price
Trust Company
Stephen V. Booth, CPA (1961) Vice President, T. Rowe Price, T. Rowe
Vice President, Value Fund Price Group, Inc., and T. Rowe Price
Trust Company
Andrew M. Brooks (1956) Vice President, T. Rowe Price and
Vice President, Value Fund T. Rowe Price Group, Inc.
Joseph A. Carrier (1960) Vice President, T. Rowe Price, T. Rowe
Treasurer, Value Fund Price Group, Inc., and T. Rowe Price
Investment Services, Inc., and T. Rowe
Price Trust Company
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Roger L. Fiery III, CPA (1959) Vice President, T. Rowe Price, T. Rowe
Vice President, Value Fund Price Group, Inc., T. Rowe Price
International, Inc., and T. Rowe Price
Trust Company
John R. Gilner (1961) Chief Compliance Officer and Vice
Chief Compliance Officer, Value Fund President, T. Rowe Price; Vice
President, T. Rowe Price Investment
Services, Inc., and T. Rowe Price
Group, Inc.
David R. Giroux, CFA (1975) Vice President, T. Rowe Price and
Vice President, Value Fund T. Rowe Price Group, Inc.
Gregory S. Golczewski (1966) Vice President, T. Rowe Price and
Vice President, Value Fund T. Rowe Price Trust Company
Michael W. Holton (1968) Vice President, T. Rowe Price and
Vice President, Value Fund T. Rowe Price Group, Inc.
Henry H. Hopkins (1942) Director and Vice President, T. Rowe
Vice President, Value Fund Price Investment Services, Inc., T. Rowe
Price Services, Inc., and T. Rowe Price
Trust Company; Vice President, T. Rowe
Price, T. Rowe Price Group, Inc.,
T. Rowe Price International, Inc., and
T. Rowe Price Retirement Plan Services,
Inc.
Kara Cheseby Landers, CFA (1963) Vice President, T. Rowe Price and
Vice President, Value Fund T. Rowe Price Group, Inc.
John D. Linehan, CFA (1965) Vice President, T. Rowe Price, T. Rowe
President, Value Fund Price Group, Inc., and T. Rowe Price
International, Inc.
Patricia B. Lippert (1953) Assistant Vice President, T. Rowe Price
Secretary, Value Fund and T. Rowe Price Investment Services,
Inc.
Heather K. McPherson, CPA (1967) Vice President, T. Rowe Price; formerly
Vice President, Value Fund intern, Salomon Smith Barney (2001);
Vice President of Finance and
Administration, Putnam Lovell
Securities, Inc. (to 2000)
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Brian C. Rogers, CFA, CIC (1955) Chief Investment Officer, Director, and
Vice President, Value Fund Vice President, T. Rowe Price and
T. Rowe Price Group, Inc.; Director and
Vice President, T. Rowe Price Trust
Company
Julie L. Waples (1970) Vice President, T. Rowe Price
Vice President, 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.
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:
2004 2003
Audit Fees $11,123 $13,315
Audit-Related Fees 1,537 766
Tax Fees 3,016 3,458
All Other Fees - 124
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) Less than 50 percent of the hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees.
(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 $903,000 and $821,000, 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. 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. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. 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 change in the registrant's internal control over financial
reporting that occurred during the registrant's second fiscal quarter covered by
this report that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is
attached.
(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 February 18, 2005
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 18, 2005
By /s/ Joseph A. Carrier
-----------------------------------
Joseph A. Carrier
Principal Financial Officer
Date February 18, 2005