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					D ecember 31, 2010




                      SMALL-CAP
                      VALUE
                      FUND
                     Annual Report




T. Rowe Price
                                     ®



                                         SM
 T . R owe P rice S mall- C ap V alue F und
 HIGHLIGHTS
 •	 Equity	investors	enjoyed	a	second	year	of	healthy	gains,	with	particu-
    larly	strong	performance	among	small-cap	shares.

 •	 The	Small-Cap	Value	Fund	recorded	a	robust	return	that	was	roughly	in	
    line	with	its	Russell	2000	Value	benchmark.

 •	 Energy	and	materials	holdings	rebounded	from	poor	performance	in	the	
    first	half	to	help	lead	the	fund’s	returns,	and	a	substantial	investment	
    in	the	thriving	industrials	sector	also	boosted	results.

 •	 While	optimistic	that	the	market	can	add	to	its	gains	in	the	coming	
    year,	I	expect	that	returns	will	be	more	muted	even	if	the	economy		
    performs	well.




The	views	and	opinions	in	this	report	were	current	as	of	December	31,	
2010.	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	 fore-
cast	of	the	fund’s	future	investment	intent.	The	report	is	certified	under	
the	 Sarbanes-Oxley	 Act,	 which	 requires	 mutual	 funds	 and	 other	 public	      	
companies	 to	 affirm	 that,	 to	 the	 best	 of	 their	 knowledge,	 the	 informa-
tion	in	their	financial	reports	is	fairly	and	accurately	stated	in	all	material	
respects.	




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T. Rowe Price Small-Cap Value Fund
Manager’s Letter


Fellow Shareholders
After threatening to stall during the spring and summer, the economic recovery

regained momentum in the fall, and a stellar rally in the last few months of 2010

helped stocks record another year of strong gains. Returns were particularly strong

for small-cap stocks, which ended the year only 9% below their all-time highs

achieved in the summer of 2007. I am happy to report that the Small-Cap Value

Fund performed very well in this environment, roughly matching the returns of its

Russell benchmark. While I think that further gains lie ahead, I caution investors that

we are unlikely to see a repeat of the very strong gains of the last two years.


                The Small-Cap Value Fund returned 26.24% over the past six months
                and 25.25% over the past year. The fund performed roughly in line
                with the Russell 2000 Value Index and its Lipper peer group index.
                The fund remained very favorably ranked among its peers over longer
                                                              time periods. (As in past
       P erformance C omparison
                                                              reports, we show results
       	                               Total	Return           for both the small-cap core
       Periods	Ended	12/31/10	 6	Months	        12	Months     and small-cap value funds
                                                              categories as we think the
       Small-Cap	Value	Fund	       26.24%	         25.25%
                                                              latter is more compatible
       Small-Cap	Value	Fund–	                                 with our investment style
       Advisor	Class	              26.09	          24.98
                                                              and objective. Based on
       Russell	2000	Index	         29.38	          26.85      cumulative total return,
       Russell	2000	Value	Index	   26.58	          24.50      Lipper ranked the Small-
       Lipper	Small-Cap	Core		
                                                              Cap Value Fund 419 of
       Funds	Index	                28.39	          25.71      797, 164 of 706, 160 of
                                                              569, and 21 of 330 small-
       Lipper	Small-Cap	Value	
                                                              cap core funds for the 1-,
       Funds	Index	                27.35	          25.74
                                                              3-, 5-, and 10-year peri-
                                                              ods ended December 31,
                2010, respectively. Results will vary for other periods. Past performance
                cannot guarantee future results.)



               1
MaRkET ENvIRONMENT
      The U.S. economy continued to recover in 2010, although the pace of
      growth slowed considerably at midyear. After growing sharply in May,
      private sector hiring fell back significantly in June, and gross domestic
      product increased at less than half the pace in the second quarter as
      it had in the first. A number of culprits may have been to blame for
      the slowdown, including reverberations from a sovereign debt crisis in
      Europe, the end of the homebuyer tax credit, and the waning impact
      of government stimulus measures. With nerves already frayed, inves-
      tors had to endure a sharp downturn in stock prices in the spring,
      punctuated by the “flash crash” of May 6, which saw the major indexes
      plunge nearly 10% in minutes before recovering most of their losses
      just as quickly. The flash crash itself was eventually attributed to
      a glitch in electronic trading, but stock prices continued to slump
      through June.
      While many began to worry that the economy might experience a
      “double dip” recession, signs of renewed economic strength later in
      the year suggested that the recovery remained on track. Both the ser-
      vice and manufacturing sectors continued to expand, and consumers
      proved willing to spend income gains. Exports remained a bright spot
      for corporate profits and the economy as a whole as emerging markets
      in particular continued to benefit from growing domestic consumption
      fed by burgeoning middle classes. Two dark clouds remained on the
      U.S. economic horizon, however. First, the housing sector continued
      to languish, with sales and construction stuck at low levels while home
      prices ended the year falling again across the country, according to
      the latest available data. Second, rising corporate profits failed to boost
      the weak labor market. Private employers added jobs throughout most
      of the year but at a meager pace that kept the unemployment rate
      near 10%.
      Continued weakness in the job market encouraged further govern-
      ment stimulus, both monetary and fiscal. After trading sideways
      through much of the summer, stocks began climbing in late August
      amid hopes for new stimulus measures from the Federal Reserve. On
      November 3, Fed officials announced that they had agreed on a plan
      to buy $600 billion of longer-term Treasuries by mid-2011 in an effort
      to lower borrowing costs and add liquidity to the financial system.
      In December, stocks marched still higher when the White House and
      Congressional Republicans announced a deal to extend existing tax
      rates and unemployment benefits while introducing a new payroll
      tax cut.


      2
     S mall- c ap v alue vs. Growth and S&P 500 Index

     	                                                           Annualized
     Periods	Ended	12/31/10	        6	Months	   12	Months	   5	Years	   10	Years
     Russell	2000	Value	Index	       26.58%	      24.50%	    3.52%	      8.42%
     Russell	2000	Growth	Index	      32.14	       29.09	     5.30	       3.78
     S&P	500	Index	                  23.27		      15.06		    2.29		      1.41




      Small-cap value stocks rallied strongly over the past six months, if not
      quite as much as their growth counterparts. Small-caps fared well rela-
      tive to other market capitalizations, outperforming large-caps handily
      for the year, while modestly outpacing mid-caps.


PORTfOLIO acTIvITy
      In a year of such strong returns, it is not surprising to note that the
      large majority of our holdings advanced for the year, as did every sector
      but one—telecommunication services. We saw our largest contribution
      from the industrials and business services sector, which has long been
      an area of emphasis for the fund. Our top contributor within the sec-
      tor was 3D Systems, a company we have owned without much reward
      for several years. The company produces systems that make three-
      dimensional objects directly from computer models. The systems are
      mostly used today in prototyping and small-batch manufacturing, and
      the products are high enough in quality to be used for aerospace appli-
      cations or racing cars. Confident in the technology’s long-term promise
      and in the company’s CEO, Abe Reichental, we have maintained our
      investment as 3D Systems worked through design, production, and
      cost issues. Over the past year, our patience was rewarded as earnings
      finally came through alongside a rebound in the manufacturing sector
      as a whole. Other top performers in the sector included Genesee &
      Wyoming, a short-haul railroad whose performance we have celebrated
      in previous letters, as well as industrial conglomerate Raven Industries.
      (Please refer to the fund’s portfolio of investments for a complete list of
      holdings and the amount each represents in the portfolio.)
      In a remarkable turnaround, our top individual contributor for the
      year was home and office furnishings rental firm Aaron’s. In our
      semiannual letter, we described how our position in the company
      had weighed heavily on results early in the year as investors shunned



      3
          consumer discretionary firms, especially those with ties to the lan-
          guishing housing sector. Aaron’s stock came roaring back in the sec-
          ond half, however, due to improving current operating results and a
          brighter outlook for 2011. To be sure, we did not have such happy
          results from all housing-related retailers in the portfolio. Haverty
                          Furniture and Lumber Liquidators weighed heavily
    GEnERALLY,	WE	        on returns for the year, as did general discount retailer
                          Stein Mart.
 DID	WELL	bY	bEInG	
                           Financials contributed nicely to the fund’s results for
     unDERWEIGhT	          the year, thanks largely to decent performance from
     In	FInAnCIALS,	       our extensive holdings among real estate investment
                           trusts (REITs). Unlike the residential market, commer-
 WhICh	REPRESEnT	          cial real estate has shown signs of a sustained recovery.
  WELL	MORE	ThAn	          Shopping center operator Saul Centers has benefited
                           from an improvement in retail sales, while Kilroy
  OnE-ThIRD	OF	ThE	        Realty has enjoyed success in the challenging southern
     RuSSELL	2000	         California office space market. Our disappointments
                           in the financials sector included capital markets firms
  VALuE	InDEx—An	          Piper Jaffray and Gleacher, a new addition to the
IMPRuDEnTLY	hIGh	          portfolio. Narrowing net interest rates and a weak com-
                           mercial lending environment weighed on many of our
WEIGhTInG,	In	OuR	         regional banks, such as Home BancShares. Generally,
OPInIOn,	FOR	A	SIn-        we did well by being underweight in financials, which
                           represent well more than one-third of the Russell 2000
                  	
     GLE	SECTOR	In	        Value Index—an imprudently high weighting, in our
     A	DIVERSIFIED	
                  	        opinion, for a single sector in a diversified portfolio.

        PORTFOLIO.          Strength in commodity prices helped materials hold-
                            ings rebound from a weak first half and end the year
                            with strong gains. The fund’s energy holdings, although
            only a small portion of the portfolio, were also very strong after weak-
            ness early in the year. Our most notable contributor was Whiting
            Petroleum, an oil company with extensive drilling rights in the pro-
            ductive Bakken Shale formation in North Dakota and Montana. We
            made our first investment in the company in late 2003, and we added
            to our holdings periodically over the following years. We were attracted
            to the company in part by its astute management team, which proved
            forward-thinking in acquiring land in North Dakota and applying
            new production techniques, such as horizontal drilling and hydraulic
            fracturing. We sold most of our stake in the company over the past six
            months as Whiting’s market cap has grown too large for our small-cap
            focus, but not before our fund’s investment in Whiting had created
            over $130 million in profits for our shareholders.


            4
              The laggards in the portfolio over the past year were spread out over
              a number of sectors. Premiere Global Services, which offers video-
              and Web-based teleconferencing, dragged down our results in the
              telecommunication services sector. Several of our biotechnology
              holdings performed poorly, including Exelixis, Myriad Genetics,
              and Incyte, the latter two of which we eliminated from the portfolio.
              Poor results from Coca-Cola Bottling were partly responsible for our
              consumer staples holdings lagging other segments of the fund. While
              oil companies benefited from rising prices, falling natural gas prices
              hindered holdings such as Penn Virginia, which produces mostly
              natural gas. Perhaps in a hopeful sign for the overall economy, bank-
              ruptcy consultant FTI Consulting declined following disappointing
              results and lowered guidance.


PuRcHaSE aNd SaLE acTIvITy
         Many of our purchases over the past six months resulted from a
         favorable need to readjust the portfolio following the sale of successful
         holdings. This was particularly true in the case of Whiting Petroleum,
         which we replaced with Oasis Petroleum and Northern Oil & Gas,
                                                       two other firms with
S ector D iversification
                                                       operations in the Bakken
	                                Percent	of	net	Assets Shale, as well as southern
	                                6/30/10	 12/31/10     California-based Venoco
Industrials	and	business	Services	 22.1%	       23.5%
                                                       and Gulf of Mexico opera-
                                                       tor Contango. Similarly,
Financials	                        22.7	        21.9
                                                       we replaced most of a
Information	Technology	            11.4	        11.5   successful investment in
Consumer	Discretionary	            10.2	        10.8   semiconductor maker
Materials	                          7.1	         8.0
                                                       Microsemi with additional
                                                       purchases of Cymer, a
Energy	                             7.1	         6.2
                                                       producer of semiconduc-
health	Care	                        5.3	         5.1   tor capital equipment.
 utilities	                             4.1	         4.1
                                                            As usual, some sales
 Consumer	Staples	                      1.8	         1.9    followed the announced
 Telecommunication	Services	            0.3	         0.3    takeover of one of our
 Other	and	Reserves	                    7.9	         6.7
                                                            holdings, but the pace
                                                            of acquisitions remains
 Total	                              100.0%	       100.0%
                                                            lower than it was a few
 h
 	 istorical	weightings	reflect	current	industry/sector	    years ago. The energy
 classifications.                                           industry has been a focus



              5
              of recent takeover activity, and we eliminated takeover targets Arena
              Resources and Superior Well Services. Of course, not all of our
              trades followed happy outcomes. In the case of Corinthian Colleges,
              we decided to take our losses and move on. The for-profit education
              business has come under scrutiny due to high default rates on student
              loans. While we still believe the industry has a viable business model,
              we determined that Corinthian was poorly positioned to adapt to new
              regulations coming from Washington.


     OuTLOOk
             The economic recovery appears to have recently entered a more secure
             phase. The drastic imbalances that characterized the global economy in
             recent years have diminished, and central banks remain committed to
                            providing stimulus. While many investors are focused
        WhILE	MAnY	  	      on the debt woes of several European countries, I
                            believe the biggest concern for the global economy is
     InVESTORS	ARE	         the potential for inflation. Rapid price increases have
    FOCuSED	On	ThE	         already taken hold within commodities, driven in large
                            part by voracious demand from China and India, and
      DEbT	WOES	OF	  	      they are likely to eventually work their way to the
 SEVERAL	EuROPEAn	          consumer level. For this reason, I am maintaining sig-
                            nificant weightings in the energy and materials sectors,
       COunTRIES,	I	        with a particular emphasis in the latter on metals and
bELIEVE	ThE	bIGGEST	        mining firms.
   COnCERn	FOR	ThE	          Continued growth in the U.S. and abroad should pro-
                             vide a favorable backdrop for equity prices, but I am
   GLObAL	ECOnOMY	    	      mindful that strong gains will be difficult to achieve fol-
    IS	ThE	POTEnTIAL	        lowing a year in which small-cap stock prices increased
                             by well over 20%. Indeed, I would not be surprised to
      FOR	InFLATIOn.	        see a correction in the coming months, if just to con-
                             solidate gains and drain some of the exuberance from
             the market. On balance, I expect an up year in 2011 but not on the
             scale of the past two years.
              In line with my moderately positive expectations for the market’s
              performance, I perceive stock valuations as roughly where they
              should be—neither sharply undervalued, as they were two years ago,
              nor particularly pricey in historical terms. Similarly, I do not sense
              any extraordinary imbalances in the valuations of small-caps relative
              to large-caps or value shares relative to growth stocks. My team and I



              6
continue to search for opportunities in a range of industries as part of
the goal of maintaining a highly diversified portfolio with a clear
value bias, and I look forward to reporting to you on the progress
of our search in six months.


Respectfully submitted,




Preston G. Athey
President of the fund and chairman of its Investment Advisory Committee
January 17, 2011
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.




7
T. Rowe Price Small-Cap Value Fund




  Risks of Stock Investing
  The	fund’s	share	price	can	fall	because	of	weakness	in	the	stock	markets,	a	particular	
  industry,	or	specific	holdings.	Stock	markets	can	decline	for	many	reasons,	including	
  adverse	political	or	economic	developments,	changes	in	investor	psychology,	or	heavy	
  institutional	selling.	The	prospects	for	an	industry	or	company	may	deteriorate	because	
  of	a	variety	of	factors,	including	disappointing	earnings	or	changes	in	the	competitive	
  environment.	In	addition,	the	investment	manager’s	assessment	of	companies	held	in	a	
  fund	may	prove	incorrect,	resulting	in	losses	or	poor	performance	even	in	rising	markets.

  Glossary
  Gross domestic product (GdP):	The	total	market	value	of	all	goods	and	services		
  produced	in	a	country	in	a	given	year.

  Lipper indexes:	Fund	benchmarks	that	consist	of	a	small	number	(10	to	30)	of	the		
  largest	mutual	funds	in	a	particular	category	as	tracked	by	Lipper	Inc.

  Price-to-book ratio:	A	valuation	measure	that	compares	a	stock’s	market	price	with	its	
  book	value;	i.e.,	the	company’s	net	worth	divided	by	the	number	of	outstanding	shares.

  Russell 2000 Index: An	unmanaged	index	that	tracks	the	stocks	of	2,000	small		
  u.S.	companies.

  Russell 2000 Growth Index:	An	index	of	those	firms	in	the	Russell	2000	with	higher	
  price-to-book	ratios	and	higher	forecasted	growth	values.

  Russell 2000 value Index: An	index	of	those	firms	in	the	Russell	2000	with	lower	price-
  to-book	ratios	and	lower	forecasted	growth	values.




              8
T. Rowe Price Small-Cap Value Fund




 P ortfolio H ighlights


      TWENTy-fIvE LaRGEST HOLdINGS
      	                                                                               Percent	of
      	                                                                               net	Assets
      	                                                                               12/31/10

      Landstar		                                                                              1.5%
      Genesee	&	Wyoming		                                                                     1.5
      Raven	Industries		                                                                      1.4
      ProAssurance		                                                                          1.4
      East	West	bancorp	                                                                      1.3
      Aaron’s		                                                                               1.3
      Progress	Software		                                                                     1.0
      LaSalle	hotel	Properties	                                                               1.0
      Carpenter	Technology		                                                                  1.0
      northern	Oil	&	Gas	                                                                     0.9
      Markel		                                                                                0.9
      Oasis	Petroleum	                                                                        0.9
      Ares	Capital	                                                                           0.9
      3D	Systems		                                                                            0.9
      SVb	Financial		                                                                         0.9
      Owens	&	Minor		                                                                         0.9
      Kilroy	Realty		                                                                         0.9
      El	Paso	Electric		                                                                      0.9
      Clearwater	Paper	                                                                       0.8
      Wintrust	Financial		                                                                    0.8
      hibbett	Sports		                                                                        0.8
      belden	                                                                                 0.8
      nordson		                                                                               0.7
      hub		                                                                                   0.7
      Southwest	Gas		                                                                         0.7	
      Total	                                                                                  24.8%

      note:	The	information	shown	does	not	reflect	any	exchange-traded	funds	(ETFs),	cash		
      reserves,	or	collateral	for	securities	lending	that	may	be	held	in	the	portfolio.




               9
T. Rowe Price Small-Cap Value Fund



 P ortfolio H ighlights


      MaJOR PORTfOLIO cHaNGES
      Listed	in	descending	order	of	size.

      Six	Months	Ended	12/31/10

      Largest Purchases                     Largest Sales
    	 SandRidge	Energy*                     Whiting	Petroleum
      Whiting	Petroleum                     Arena	Resources**
      Oasis	Petroleum                       SandRidge	Energy**
      Cloud	Peak	Energy                     Acme	Packet
      Swift	Energy*                         Superior	Well	Services**
      northern	Oil	&	Gas                    Mariner	Energy**
      Venoco*                               Whiting	Petroleum	Convertible	Preferred**
      Christopher	&	banks*                  Gymboree**
      Wintrust	Financial                    Centerra	Gold**
      northwestern                          Formfactor**
        *P
        	 	 osition	added.
      * P
      	 *	 osition	eliminated.




               10
T. Rowe Price Small-Cap Value Fund
Performance and Expenses


 G rowth of $10,000


          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.


           S M a L L- c a P va L u E f u N d

             As	of	12/31/10
$30,000
                    Small-Cap	Value	Fund			$29,420
 26,000             Russell	2000	Index			$18,477
 22,000
 18,000
 14,000
 10,000


         12/00    12/01     12/02     12/03     12/04     12/05         12/06   12/07     12/08    12/09    12/10

           note:	Performance	for	the	Advisor	Class	will	vary	due	to	its	differing	fee	structure.	See	the	
           returns	table	below.	 	         	           	

          A nnual C
 A veragemove	up	150	ptsompound T otal R eturn
 30000
 26000
            Periods	Ended	12/31/10	                  	              	      1	Year	      5	Years	   10	Years

 22000      Small-Cap	Value	Fund	                	              	         25.25%	        5.66%	     11.39%
 18000      Small-Cap	Value	Fund–Advisor	Class	                 	         24.98	         5.46	      11.19
 14000
          Current performance may be higher or lower than the quoted past performance, which
 10000    cannot guarantee future results. Share price, principal value, and return will vary, and
  6000    you may have a gain or loss when you sell your shares. For the most recent month-end
      12/00     12/01    12/02     12/03    12/04    12/05     12/06     12/07    12/08     12/09     12/10
          performance, please contact a T. Rowe Price representative at 1-800-225-5132 or, for
          Advisor Class shares, 1-800-638-8790. The performance information shown does not
          reflect the deduction of a 1% redemption fee on shares held for 90 days or less. If it did,
          the performance would be lower.
           use	dashed	black	line	for	Lipper	Indexes	only.		use	solid	black	line	for	other	indexes.
            This	table	shows	how	the	fund	would	have	performed	each	year	if	its	actual	(or	cumula-
           BE SuRE TO RETyPE LaBELS TO MaTcH $ fIGuRES aNd yEaRS ON GRaPH aBOvE WITH THOSE PLOTTEd BELOW!!
           tive)	returns	had	been	earned	at	a	constant	rate.	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.




                   11
T. Rowe Price Small-Cap Value Fund



 E xpense R atio

        Small-Cap	Value	Fund	               	           	             	             	        0.97%
        Small-Cap	Value	Fund–Advisor	Class	             	             	             	        1.16

        The	expense	ratio	shown	is	as	of	the	fund’s	fiscal	year	ended	12/31/09.	This	number	
        may	vary	from	the	expense	ratio	shown	elsewhere	in	this	report	because	it	is	based	on		
        a	different	time	period	and,	if	applicable,	does	not	include	fee	or	expense	waivers.



 F und E xpense E xample


      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,	distri-
      bution	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	com-
      pare	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,	and	the	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	val-
      ues	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%	hypotheti-
      cal	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.	




              12
T. Rowe Price Small-Cap Value Fund



 F und E xpense E xample (continued)

      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	auto-
      matic	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	table.	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.



       S mall -C ap V alue F und

       	                                beginning	            Ending		            Expenses	Paid	
       	                            Account	Value	      Account	Value	            During	Period*	
       	                                  7/1/10	           12/31/10	        7/1/10	to	12/31/10
       Investor class
       Actual	                         $1,000.00	           $1,262.40		                     $4.68
       hypothetical	(assumes	5%		
       return	before	expenses)	          1,000.00	           1,021.07		                      4.18
       advisor class
       Actual	                           1,000.00	           1,260.90		                      6.10
       hypothetical	(assumes	5%		
       return	before	expenses)	          1,000.00	           1,019.81		                      5.45

       *Expenses	are	equal	to	the	fund’s	annualized	expense	ratio	for	the	6-month	period,	mul-
        tiplied	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	(365)	to	reflect	
        the	half-year	period.	The	annualized	expense	ratio	of	the	Investor	Class	was	0.82%,	and	
        the	Advisor	Class	was	1.07%.




              13
   R ROWE PRICE SMALL ap V VALUE FUND
T. T. owe Price Small-C-CAPalue Fund



  FINANCIAL HIGHLIGHTS                                          For a share outstanding throughout each period
 F inancial H ighlights                                           For	a	share	outstanding	throughout	each	period



 Investor Class
                                                   Year
                                                  Ended
                                                        ‡        ‡        ‡        ‡        ‡
                                                12/31/10 12/31/09 12/31/08 12/31/07 12/31/06
 NET ASSET VALUE
 Beginning of period                            $ 29.48       $ 23.50      $ 35.92      $ 41.21       $ 36.91

 Investment activities
   Net investment income                             0.25         0.22          0.20         0.26         0.25
   Net realized and unrealized gain
   (loss)                                            7.18         6.09        (10.58)       (0.39)        5.73
   Total from investment activities                  7.43         6.31        (10.38)       (0.13)        5.98

 Distributions
   Net investment income                            (0.26)        (0.26)       (0.27)       (0.28)        (0.27)
   Net realized gain                                (0.52)        (0.07)       (1.77)       (4.88)        (1.41)
   Total distributions                              (0.78)        (0.33)       (2.04)       (5.16)        (1.68)

 NET ASSET VALUE
 End of period                                  $ 36.13       $ 29.48      $ 23.50      $ 35.92       $ 41.21

 Ratios/Supplemental Data

 Total return(1)                                 25.25%        26.88%        (28.61)%     (0.13)%      16.24%
 Ratio of total expenses to average net
 assets                                           0.83%         0.87%         0.85%        0.81%        0.83%
 Ratio of net investment income to
 average net assets                               0.80%         0.87%         0.63%        0.62%        0.63%
 Portfolio turnover rate                         11.7%          7.8%         13.2%        14.0%        12.2%
 Net assets, end of period
 (in millions)                                  $ 5,985       $ 4,807      $ 3,581      $ 4,936       $ 5,387


 ‡
       Per share amounts calculated using average shares outstanding method.
 (1)
       Total return reflects the rate that an investor would have earned on an investment in the fund
       during each period, assuming reinvestment of all distributions and payment of no redemption or
       account fees. Total return is not annualized for periods less than one year.




       The accompanying notes are an integral part of these financial statements.
The	accompanying	notes	are	an	integral	part	of	these	financial	statements.	


                   14
   Rowe PPRICE SMALL-CAP alue F FUND
T.T. ROWE rice Small-Cap VVALUE und



    FINANCIAL HIGHLIGHTS                                        For a share outstanding throughout each period
    F inancial H ighlights                                        For	a	share	outstanding	throughout	each	period



Advisor Class
                                                 Year
                                                Ended
                                                      ‡        ‡        ‡        ‡        ‡
                                              12/31/10 12/31/09 12/31/08 12/31/07 12/31/06
NET ASSET VALUE
Beginning of period                           $ 29.32      $ 23.39        $ 35.74        $ 40.99       $ 36.73

Investment activities
  Net investment income                            0.18          0.16           0.14           0.18          0.18
  Net realized and unrealized gain
  (loss)                                           7.13          6.06         (10.51)         (0.38)         5.69
  Total from investment activities                 7.31          6.22         (10.37)         (0.20)         5.87

Distributions
  Net investment income                           (0.19)        (0.22)         (0.21)         (0.17)        (0.20)
  Net realized gain                               (0.52)        (0.07)         (1.77)         (4.88)        (1.41)
  Total distributions                             (0.71)        (0.29)         (1.98)         (5.05)        (1.61)

NET ASSET VALUE
End of period                                 $ 35.92      $ 29.32        $ 23.39        $ 35.74       $ 40.99

Ratios/Supplemental Data

Total return(1)                                24.98%          26.62%         (28.74)%       (0.31)%       16.02%
Ratio of total expenses to average
net assets                                      1.07%          1.06%          1.02%          1.02%         1.02%
Ratio of net investment income to
average net assets                              0.56%          0.64%          0.43%          0.42%         0.44%
Portfolio turnover rate                        11.7%           7.8%           13.2%          14.0%         12.2%
Net assets, end of period
(in millions)                                 $ 1,074      $     790      $     427      $     670     $     738


‡
      Per share amounts calculated using average shares outstanding method.
(1)
      Total return reflects the rate that an investor would have earned on an investment in the fund
      during each period, assuming reinvestment of all distributions and payment of no redemption or
      account fees. Total return is not annualized for periods less than one year.




      The accompanying notes are an integral part of these financial statements.
The	accompanying	notes	are	an	integral	part	of	these	financial	statements.	


                   15
T. Rowe Price Small-Cap Value Fund
	                                                            December	31,	2010
    T. ROWE PRICE SMALL-CAP VALUE FUND
                                                               December 31, 2010
                                              ‡
    Portfolio of
     P ortfolio of           Investments
                             I nvestments ‡       Shares/$ Par
                                                  Shares/$ Par           Value
                                                                          value
 (Cost and value in $000s)
(Cost	and	value	in	$000s)


    COMMON STOCKS 91.4%

    CONSUMER DISCRETIONARY 10.7%

    Auto Components 1.3%
    Dorman Products (1)(2)                         1,050,000            38,052
    Drew Industries                                1,018,900            23,149
    Fuel Systems Solutions (2)                       370,000            10,870
    Shiloh Industries (1)                            902,000            10,779
    Strattec Security (1)                            287,900             9,596
                                                                        92,446

    Automobiles 0.4%
    Winnebago (1)(2)                               2,010,000            30,552
                                                                        30,552

    Distributors 0.5%
    Pool                                             935,000            21,075
    Weyco Group                                      553,399            13,553
                                                                        34,628

    Diversified Consumer Services 0.3%
    Matthews International, Class A                  293,500            10,267
    National American University Holdings (1)      1,786,800            13,115
                                                                        23,382

    Hotels, Restaurants & Leisure 0.5%
    Orient-Express, Class A (2)                    2,630,000            34,164
                                                                        34,164

    Household Durables 1.7%
    Cavco Industries (1)(2)                          600,000            28,014
    CSS Industries (1)                               985,000            20,301
    Dixie Group (2)                                1,101,000             3,952
    Ethan Allen Interiors                            360,000             7,204
    Hooker Furniture (1)                             960,000            13,565
    M/i Homes (2)                                    900,000            13,842
    Meritage (2)                                   1,020,000            22,644
    First Page Footer




                        16
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                     Shares/$ Par
                                     Shares/$ Par     Value
                                                       value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


Sealy (2)                               596,980       1,743
Standard Pacific (2)                  1,100,000       5,060
Stanley Furniture (1)(2)              1,230,331       3,826
                                                    120,151

Internet & Catalog Retail 0.1%
Drugstore.com (2)                     1,660,000       3,668
                                                      3,668

Leisure Equipment & Products 0.6%
Brunswick                             2,040,000      38,230
Clarus (2)                              953,401       7,541
                                                     45,771

Media 0.8%
Ascent Media, Class A (2)               613,500      23,779
Fisher Communications (2)               112,724       2,458
Knology (2)                             838,400      13,104
Live Nation Entertainment (2)           790,000       9,022
Saga Communications (2)                 404,750      10,653
                                                     59,016

Multiline Retail 0.3%
Fred's                                1,320,000      18,163
                                                     18,163

Specialty Retail 3.9%
Aarons, Class A (1)                   4,448,550      90,706
Christopher & Banks                   1,650,000      10,148
Haverty Furniture                     1,106,000      14,356
Hibbett Sports (1)(2)                 1,501,700      55,413
Lumber Liquidators (2)                  770,000      19,181
MarineMax (2)                           320,000       2,992
Men's Wearhouse                       1,430,000      35,721
Monro Muffler Brake                     300,000      10,377




                  17
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                        Shares/$ Par
                                        Shares/$ Par     Value
                                                          value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


New York & Company (2)                   1,450,000       6,409
Pier 1 Imports (2)                       1,094,710      11,494
Stein Mart (1)                           2,150,000      19,887
                                                       276,684

Textiles, Apparel & Luxury Goods 0.3%
Culp (1)(2)                                880,000       9,117
Steven Madden (2)                          217,500       9,074
                                                        18,191

Total Consumer Discretionary                           756,816

CONSUMER STAPLES 1.9%

Beverages 0.3%
Coca-Cola Bottling                         402,888      22,392
                                                        22,392

Food & Staples Retailing 0.8%
Nash Finch (1)                             839,200      35,674
PriceSmart                                 560,600      21,320
                                                        56,994

Food Products 0.4%
J.G. Boswell                                32,000      24,000
                                                        24,000

Household Products 0.2%
Oil-Dri                                    630,000      13,539
                                                        13,539

Tobacco 0.2%
Alliance One International (2)           3,600,000      15,264
                                                        15,264

Total Consumer Staples                                 132,189




                   18
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                     Shares/$ Par
                                     Shares/$ Par     Value
                                                       value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


ENERGY 6.0%

Energy Equipment & Services 2.0%
Atwood Oceanics (2)                     615,000      22,983
Carbo Ceramics                          425,000      44,004
Gulf Island Fabrication                 444,284      12,520
Hercules Offshore (2)                 2,000,000       6,920
TETRA Technologies (1)(2)             4,000,000      47,480
Union Drilling (1)(2)                 1,175,000       8,554
                                                    142,461

Oil, Gas & Consumable Fuels 4.0%
Cloud Peak Energy (2)                 1,759,200      40,866
Contango Oil & Gas (2)                  143,800       8,330
Forest Oil (2)                          635,000      24,111
Geomet (2)                            1,810,000       2,082
Northern Oil & Gas (2)                2,460,000      66,937
Oasis Petroleum (2)                   2,435,000      66,037
Penn Virginia                         1,800,000      30,276
Swift Energy (2)                        500,000      19,575
Venoco (2)                              650,000      11,992
Whiting Petroleum (2)                    75,600       8,860
                                                    279,066

Total Energy                                        421,527

FINANCIALS 21.1%

Capital Markets 3.2%
Ares Capital                          4,000,000      65,920
Capital Southwest                       110,000      11,418
GFI Group                               890,000       4,174
Gladstone Capital                       400,000       4,608
Gleacher (2)                          2,825,000       6,695
Hercules Technology Growth            1,181,200      12,237




                   19
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                                   Shares/$ Par
                                                   Shares/$ Par     Value
                                                                     value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


JMP                                                   955,000       7,287
KBW                                                   920,000      25,686
Kohlberg Capital                                      625,000       4,356
PennantPark Investment                              1,000,000      12,240
Piper Jaffray (2)                                     445,000      15,580
Safeguard Scientifics (2)                             940,000      16,055
Sanders Morris Harris Group                         1,400,000      10,150
Stifel Financial (2)                                  495,000      30,710
                                                                  227,116

Commercial Banks 6.3%
Bank of Kentucky Financial                            286,700       5,565
Bridge Capital (1)(2)                                 702,600       6,113
Burke & Herbert                                         4,537      10,322
Cobiz Financial (1)                                 2,660,000      16,173
Columbia Banking System                               955,000      20,112
East West Bancorp                                   3,447,290      67,394
Farmers & Merchants Bank of Long Beach                  2,390       9,799
First Opportunity Fund (2)                            734,700       5,459
First Southern Bancorp, Acquisition Date: 2/1/10
Acquisition Cost $18,503 (2)(3)                       876,915      17,301
Glacier Bancorp                                     2,325,000      35,131
Home Bancshares                                     1,383,614      30,481
Preferred Bank (1)(2)                               4,962,187       8,733
Sandy Spring Bancorp                                  900,000      16,587
Signature Bank (2)                                    662,600      33,130
SVB Financial Group (2)                             1,000,000      53,050
Texas Capital Bancshares (2)                        1,320,000      28,076
Washington Trust Bancorp                              600,000      13,128
Western Alliance Bancorp (2)                        1,950,000      14,352
Wintrust Financial (1)                              1,755,000      57,968
                                                                  448,874




                    20
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                             Shares/$ Par
                                             Shares/$ Par     Value
                                                               value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


Diversified Financial Services 0.4%
Compass Diversified Holdings                  1,480,000      26,181
                                                             26,181

Insurance 4.0%
Alterra Capital Holdings                      1,845,000      39,926
Assured Guaranty                                698,500      12,363
Employers Holdings                            1,000,000      17,480
Fortegra Financial (2)                          509,700       5,632
Markel (2)                                      175,500      66,362
Meadowbrook Insurance Group                   1,000,000      10,250
National Interstate (1)                       1,208,900      25,870
ProAssurance (1)(2)                           1,600,000      96,960
SeaBright Holdings                              625,000       5,763
                                                            280,606

Real Estate Investment Trusts (REITs) 6.9%
Acadia Realty Trust, REIT                     1,257,882      22,944
CBL & Associates Properties, REIT             1,100,000      19,250
Cedar Shopping Centers, REIT                  1,548,098       9,738
DiamondRock Hospitality, REIT (2)               400,000       4,800
EastGroup Properties, REIT                      475,000      20,102
First Potomac Realty Trust, REIT              2,000,000      33,640
Hatteras Financial                            1,080,000      32,692
Kilroy Realty, REIT                           1,700,000      61,999
Kite Realty Group Trust, REIT (1)             5,000,000      27,050
LaSalle Hotel Properties, REIT                1,913,600      50,519
New York Mortgage Trust, REIT (1)               759,500       5,286
Parkway Properties, REIT                        740,000      12,965
Pebblebrook Hotel Trust, REIT                   600,000      12,192
Potlatch, REIT                                1,400,000      45,570
Redwood Trust, REIT                           1,934,800      28,887
Saul Centers, REIT (1)                          920,000      43,562
Strategic Hotel & Resorts, REIT (2)           2,250,000      11,902




                  21
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                                Shares/$ Par
                                                Shares/$ Par      Value
                                                                   value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


Terreno Realty, REIT (1)(2)                        510,000        9,144
Washington Real Estate Investment Trust, REIT    1,113,400       34,504
                                                                486,746

Thrifts & Mortgage Finance 0.3%
Radian                                           1,225,000        9,886
United Financial Bancorp                           700,000       10,689
                                                                 20,575

Total Financials                                               1,490,098

HEALTH CARE 4.9%

Biotechnology 0.7%
Exelixis (2)                                     2,720,000       22,331
Infinity Pharmaceuticals (2)                       620,000        3,677
Lexicon Pharmaceuticals (2)                      5,350,000        7,704
Momenta Pharmaceuticals (2)                      1,075,000       16,093
                                                                 49,805

Health Care Equipment & Supplies 1.7%
Analogic                                           520,000       25,745
Angiodynamics (2)                                  770,000       11,835
Atrion (1)                                         177,000       31,765
Quidel (1)(2)                                    2,068,500       29,890
RTI Biologics (2)                                  305,376          815
West Pharmaceutical Services                       455,000       18,746
                                                                118,796

Health Care Providers & Services 2.2%
Capital Senior Living (1)(2)                     1,810,000       12,127
Landauer (1)                                       560,000       33,583
LCA-Vision (2)                                     635,000        3,651
National Healthcare                                460,100       21,289
Owens & Minor                                    2,137,500       62,907
Triple-S Management, Class B (2)                   900,000       17,172




                    22
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                        Shares/$ Par
                                        Shares/$ Par     Value
                                                          value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


Universal American Financial               250,000       5,112
                                                       155,841

Health Care Technology 0.1%
Vital Images (2)                           257,432       3,599
                                                         3,599

Life Sciences Tools & Services 0.1%
Accelrys (2)                               940,000       7,802
Strategic Diagnostics (1)(2)             1,650,000       2,953
                                                        10,755

Pharmaceuticals 0.1%
Cadence Pharmaceuticals (2)                300,000       2,265
Optimer Pharmaceuticals (2)                600,000       6,786
                                                         9,051

Total Health Care                                      347,847

INDUSTRIALS & BUSINESS SERVICES 23.4%

Aerospace & Defense 0.2%
American Science Engineering                50,000       4,262
Breeze-Eastern (1)(2)                      770,000       5,459
Hexcel (2)                                 125,000       2,261
                                                        11,982

Air Freight & Logistics 1.1%
Hub Group, Class A (2)                   1,435,000      50,426
UTi Worldwide                            1,410,000      29,892
                                                        80,318

Airlines 0.5%
Alaska Air Group (2)                       460,000      26,077
SkyWest                                    750,000      11,715
                                                        37,792




                   23
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                      Shares/$ Par
                                      Shares/$ Par     Value
                                                        value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


Building Products 2.1%
A.O. Smith                               742,200      28,263
Ameron International (1)                 520,000      39,712
Builders FirstSource (2)               1,431,300       2,820
Gibraltar Industries (2)               1,457,098      19,773
Insteel Industries (1)                   920,000      11,491
Quanex Building Products                 485,000       9,200
Universal Forest Products (1)          1,000,000      38,900
                                                     150,159

Commercial Services & Supplies 2.4%
Courier (1)                            1,036,200      16,082
Ecology (1)                              975,000      16,946
G & K Services, Class A                  700,000      21,637
McGrath RentCorp (1)                   1,734,000      45,466
Mine Safety Appliances                 1,080,000      33,620
Waste Connections                      1,185,300      32,631
                                                     166,382

Construction & Engineering 1.1%
Comfort Systems USA                    1,500,000      19,755
Insituform Technologies (2)            1,730,000      45,862
MYR Group (2)                             28,210        593
Pike Electric (2)                      1,090,000       9,352
Sterling Construction (2)                360,000       4,694
                                                      80,256

Electrical Equipment 1.6%
Belden                                 1,485,000      54,678
Franklin Electric                        320,000      12,454
LSI Industries                           154,334       1,306
Woodward Governor                      1,226,400      46,063
                                                     114,501




                    24
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                     Shares/$ Par
                                     Shares/$ Par     Value
                                                       value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


Industrial Conglomerates 1.5%
Raven Industries (1)                  2,140,300     102,071
Smith Investment (2)                     43,100         108
Smith Investment, EC                     75,000           —
                                                    102,179

Machinery 4.8%
3-D Systems (1)(2)                    2,070,000      65,184
Astec Industries (2)                    585,000      18,960
Badger Meter                            700,000      30,954
Cascade                                 369,000      17,446
CIRCOR International                    550,000      23,254
Colfax (2)                              585,900      10,786
Greenbrier Companies (2)                850,000      17,842
Lydall (1)(2)                         1,650,000      13,283
Middleby (2)                            300,000      25,326
Nordson                                 555,700      51,058
RBC Bearings (2)                        500,000      19,540
Robbins & Myers                         400,000      14,312
Sun Hydraulics                          716,778      27,094
                                                    335,039

Marine 1.0%
International Shipholding (1)           525,000      13,335
Kirby (2)                             1,010,000      44,490
Overseas Shipholding Group              359,200      12,723
                                                     70,548

Professional Services 1.5%
Dolan (2)                             1,240,000      17,261
FTI Consulting (2)                    1,145,000      42,686
Kforce (2)                              880,100      14,240
Navigant Consulting (2)               1,420,000      13,064




                   25
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                           Shares/$ Par
                                           Shares/$ Par      Value
                                                              value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


On Assignment (1)(2)                        2,120,000       17,278
                                                           104,529

Road & Rail 4.0%
Genesee & Wyoming, Class A (2)              1,940,000      102,723
Landstar System (1)                         2,610,000      106,853
Patriot Transportation Holdings (1)(2)        266,500       24,774
RailAmerica (2)                               726,000        9,402
Universal Truckload Services (2)              567,000        9,027
USA Truck (1)(2)                            1,000,000       13,230
Vitran (1)(2)                               1,180,000       15,481
                                                           281,490

Trading Companies & Distributors 1.6%
Aceto                                       1,207,500       10,868
Applied Industrial Technologies               600,000       19,488
Beacon Roofing Supply (2)                   1,635,000       29,217
Essex Rental, Acquisition Date: 11/24/10
Acquisition Cost $7,310 (2)(3)              1,700,000        8,883
Kaman                                         950,000       27,616
United Rentals (2)                            845,524       19,236
                                                           115,308

Total Industrials & Business Services                     1,650,483

INFORMATION TECHNOLOGY 11.2%

Communications Equipment 1.2%
Acme Packet (2)                               140,000        7,442
Blue Coat Systems (2)                         835,740       24,964
Comarco (1)(2)                                670,000          280
Ixia (2)                                    1,700,000       28,526
Shoretel (2)                                1,141,500        8,915
Sonus Networks (2)                          4,500,000       12,015
                                                            82,142




                   26
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                                      Shares/$ Par
                                                      Shares/$ Par     Value
                                                                        value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


Computers & Peripherals 0.7%
Intevac (2)                                              850,000      11,909
Synaptics (2)                                            780,000      22,916
Xyratex (2)                                              750,000      12,232
                                                                      47,057

Electronic Equipment, Instruments & Components 3.1%
Electro Rent (1)                                       2,055,300      33,214
Electro Scientific Industries (2)                        865,500      13,874
Fabrinet (2)                                             500,000      10,750
FLIR Systems (2)                                         860,000      25,585
GTSI (1)(2)                                              955,000       4,489
Littelfuse                                               667,000      31,389
Methode Electronics                                    1,501,000      19,468
MTS Systems                                              370,164      13,866
Newport (2)                                              764,100      13,272
Richardson Electronics                                   710,000       8,300
Synnex (2)                                               840,000      26,208
Zygo (1)(2)                                            1,360,000      16,633
                                                                     217,048

Internet Software & Services 0.7%
Digital River (2)                                         90,000       3,098
RealNetworks (2)                                       2,582,919      10,848
Saba Software (1)(2)                                   1,503,896       9,204
Savvis (2)                                               104,319       2,662
Taleo, Class A (2)                                       835,000      23,088
                                                                      48,900

IT Services 0.5%
Kratos Defense & Security Solutions (1)(2)             1,170,000      15,409
Startek (1)(2)                                           925,000       4,690
TNS (2)                                                  891,800      18,549
                                                                      38,648




                    27
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                               Shares/$ Par
                                               Shares/$ Par     Value
                                                                 value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


Semiconductor & Semiconductor Equipment 3.6%
Actions Semiconductor, ADR (1)(2)               1,478,354       3,178
Advanced Energy Industries (2)                  1,365,600      18,627
ATMI (2)                                          719,400      14,345
Brooks Automation (2)                           2,385,000      21,632
BTU International (1)(2)                          760,000       6,832
Cabot Microelectronics (2)                        550,000      22,797
Cognex                                            886,000      26,066
Cohu (1)                                        1,190,000      19,730
Cyberoptics (1)(2)                                640,400       5,469
Cymer (2)                                         250,000      11,268
Entegris (2)                                    2,150,000      16,060
Mattson Technology (2)                          1,140,000       3,420
Microsemi (2)                                     645,000      14,771
Standard Microsystems (2)                         755,000      21,767
Teradyne (2)                                    1,000,000      14,040
Veeco (2)                                         680,000      29,213
Zarlink Semiconductor (2)                       5,000,000       9,198
                                                              258,413

Software 1.4%
Callidus Software (2)                           1,000,000       5,040
Monotype Imaging Holdings (2)                      80,000        888
Progress Software (2)                           1,750,000      74,060
Websense (2)                                    1,064,300      21,552
                                                              101,540

Total Information Technology                                  793,748

MATERIALS 8.0%

Chemicals 2.5%
American Vanguard (1)                           2,000,000      17,080
Arch Chemicals                                    900,000      34,137
Hawkins Chemical (1)                              575,300      25,543




                   28
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                     Shares/$ Par
                                     Shares/$ Par     Value
                                                       value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


Innospec (1)(2)                       2,402,000      49,001
KMG Chemicals                            37,399         620
Material Sciences (2)                    10,000          64
Minerals Technologies                   360,000      23,548
Penford (1)(2)                        1,000,000       6,110
Rockwood Holdings (2)                   510,000      19,951
                                                    176,054

Containers & Packaging 0.3%
Myers Industries (1)                  2,000,000      19,480
                                                     19,480

Metals & Mining 3.8%
AMCOL International                     735,000      22,785
Carpenter Technology                  1,720,000      69,213
Central Fund of Canada, Class A       1,935,700      40,127
Contago ORE (2)                           4,421          47
Franco-Nevada (CAD)                     870,000      29,102
Haynes International                     50,000       2,091
Mesabi Trust                            265,000      10,200
North American Palladium (2)          1,100,000       7,634
Platinum Group Metals (2)             1,681,100       4,497
Royal Gold                              420,000      22,945
Sandstorm Resources (2)               2,865,600       2,306
Sims Metal Management, ADR            1,220,000      26,645
Stillwater Mining (2)                 1,200,000      25,620
Synalloy (1)                            353,246       4,281
                                                    267,493

Paper & Forest Products 1.4%
Clearwater Paper (1)(2)                 655,000      51,286
Deltic Timber (1)                       708,600      39,923




                    29
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                                               Shares/$ Par
                                                               Shares/$ Par     Value
                                                                                 value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


Wausau Paper                                                    1,500,000      12,915
                                                                              104,124

Total Materials                                                               567,151

TELECOMMUNICATION SERVICES 0.3%

Diversified Telecommunication Services 0.3%
Hickory Technology                                                330,000       3,168
Pegasus (2)                                                       234,712           —
Premiere Global Services (2)                                    2,200,000      14,960

Total Telecommunication Services                                               18,128

UTILITIES 3.9%

Electric Utilities 2.1%
Central Vermont Public Service                                     56,793       1,241
Cleco                                                           1,275,000      39,219
El Paso Electric (1)(2)                                         2,180,300      60,024
Empire District Electric                                          590,000      13,098
PNM Resources                                                     715,000       9,309
UniSource Energy                                                  745,000      26,701
                                                                              149,592

Gas Utilities 0.7%
Sino Gas International Holdings, Acquisition Date: 9/10/07 –
5/13/10, Acquisition Cost $2,908 (2)(3)                         1,732,210        608
Southwest Gas                                                   1,360,000      49,871
                                                                               50,479

Multi-Utilities 1.1%
Black Hills                                                       825,000      24,750
Northwestern                                                    1,170,000      33,731
Vectren                                                           550,000      13,959
                                                                               72,440




                   30
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                                              Shares/$ Par
                                                              Shares/$ Par      Value
                                                                                 value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


Water Utilities 0.0%
Aqua Venture Holdings, Warrants, 1/5/12, Acquisition
Date: 10/25/10, Acquisition Cost $2 (2)(3)                        49,616           20
Western Water (2)                                                  2,259            —
Western Water, Warrants, 9/1/15, Acquisition Date: 10/16/09
Acquisition Cost $0 (2)(3)                                         2,801            —
                                                                                   20

Total Utilities                                                               272,531


Total Common Stocks (Cost $4,131,557)                                        6,450,518


PREFERRED STOCKS 0.3%

CONSUMER DISCRETIONARY 0.0%

Broadcasting 0.0%
Spanish Broadcasting, Series B                                     2,458        1,622

Total Consumer Discretionary                                                    1,622

FINANCIALS 0.3%

Real Estate Investment Trust Securities 0.3%
Cedar Shopping Centers                                             8,632          217
LaSalle Hotel Properties, Series D                               314,730        7,576
LaSalle Hotel Properties, Series E                               445,350       11,089
LaSalle Hotel Properties, Series G                                24,712          587
Saul Centers, Series A (1)                                        68,400        1,730

Total Financials                                                               21,199


Total Preferred Stocks (Cost $10,077)                                          22,821




                   31
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                                   Shares/$ Par
                                                   Shares/$ Par    Value
                                                                    value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


CONVERTIBLE PREFERRED STOCKS 0.9%

CONSUMER DISCRETIONARY 0.1%

Household Durables 0.1%
Sealy (2)                                              96,607      8,438

Total Consumer Discretionary                                       8,438

ENERGY 0.0%

Oil, Gas & Consumable Fuels 0.0%
GeoMet, Series A                                      190,280      2,031

Total Energy                                                       2,031

FINANCIALS 0.5%

Commercial Banks 0.4%
East West Bancorp, Series A                            17,839     25,495
First Southern Bancorp, Acquisition Date: 2/1/10
Acquisition Cost $1,499 (2)(3)                          1,499      1,499
                                                                  26,994

Insurance 0.1%
Assured Guaranty                                      126,500      9,358
                                                                   9,358

Total Financials                                                  36,352

HEALTH CARE 0.2%

Health Care Providers & Services 0.2%
National Healthcare, Series A                         790,000     11,297

Total Health Care                                                 11,297




                   32
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                                               Shares/$ Par
                                                               Shares/$ Par    Value
                                                                                value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


UTILITIES 0.1%

Water Utilities 0.1%
Aqua Venture Holdings, Acquisition Date: 7/16/10
Acquisition Cost $3,000 (2)(3)                                  1,250,000      2,994
Aqua Venture Holdings, Series A1, Acquisition Date: 10/25/10
Acquisition Cost $594 (2)(3)                                      248,079        594
Aqua Venture Holdings, Series A2, Acquisition Date: 10/25/10
Acquisition Cost $446 (2)(3)                                      186,060        446
Aqua Venture Holdings, Series A3, Acquisition Date: 10/25/10
Acquisition Cost $149 (2)(3)                                       62,020        148

Total Utilities                                                                4,182


Total Convertible Preferred Stocks (Cost $46,582)                             62,300


CONVERTIBLE BONDS 1.1%

Acadia Realty Trust, 3.75%, 12/15/26                           10,000,000     10,097
Airtran Holdings, 7.00%, 7/1/23                                 3,000,000      3,073
Greenbrier Companies, 2.375%, 5/15/26                           9,100,000      8,383
Hercules Offshore, VR, 3.375%, 6/1/38                           4,500,000      3,443
Palm Harbor Homes, 3.25%, 5/15/24 (2)(4)                        8,000,000      1,400
Penn Virginia, 4.50%, 11/15/12                                 10,000,000      9,870
SVB Financial Group, 3.875%, 4/15/11 (5)                       10,000,000     10,759
Teradyne, 4.50%, 3/15/14                                        3,779,000     10,107
Unisource Energy, 4.50%, 3/1/35                                10,000,000     10,617
Veeco Instruments, 4.125%, 4/15/12                              5,000,000      8,000

Total Convertible Bonds (Cost $61,608)                                        75,749


CORPORATE BONDS 0.5%

Alliance One, 10.00%, 7/15/16                                   3,000,000      3,090
Black Hills, 6.50%, 5/15/13                                     7,000,000      7,513
Clearwater Paper, 7.125%, 11/1/18 (1)(5)                        2,325,000      2,401




                  33
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                                                         Shares/$ Par
                                                                         Shares/$ Par          Value
                                                                                                value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)


Clearwater Paper, 10.625%, 6/15/16 (1)                                    4,500,000            5,141
Gibraltar Industries, VR, 8.00%, 12/1/15                                  8,000,000            8,070
PNM Resources, 9.25%, 5/15/15                                             3,830,000            4,232
Western Alliance Bancorp, 10.00%, 9/1/15                                  5,700,000            5,985

Total Corporate Bonds (Cost $33,423)                                                          36,432


BANK LOANS 0.1%         (6)

Knology, VR, 5.50%, 9/13/16                                               5,500,000            5,526
Western Water, VR, 10.00%, 9/1/13                                           733,505              734

Total Bank Loans                                                                               6,260


Total Bank Loans (Cost $6,180)                                                                 6,260


EQUITY MUTUAL FUNDS 0.7%
iShares Russell 2000 Value                                                  660,000           46,919

Total Equity Mutual Funds (Cost $31,565)                                                      46,919


SHORT-TERM INVESTMENTS 5.0%

Money Market Funds 5.0%

T. Rowe Price Reserve Investment Fund, 0.27% (1)(7)                     355,445,122          355,445

Total Short-Term Investments (Cost $355,445)                                                 355,445


Total Investments in Securities
100.0% of Net Assets (Cost $4,676,437)                                                  $   7,056,444

              ‡   Denominated in U.S. dollars unless otherwise noted.
            (1)   Affiliated Companies
            (2)   Non-income producing




                   34
T. ROWE PRICE SMALL-CAP VALUE FUND
T. Rowe Price Small-Cap Value Fund




                                                                            Shares/$ Par           Value
  (Cost and value in $000s)
(Cost	and	value	in	$000s)

            (3)   Security cannot be offered for public resale without first being registered under the
                  Securities Act of 1933 and related rules ("restricted security"). Acquisition date
                  represents the day on which an enforceable right to acquire such security is
                  obtained and is presented along with related cost in the security description. The
                  fund has registration rights for certain restricted securities. Any costs related to
                  such registration are borne by the issuer. The aggregate value of restricted
                  securities (excluding 144A holdings) at period-end amounts to $32,493 and
                  represents 0.5% of net assets.
            (4)   Issuer is currently in a Chapter 11 bankruptcy reorganization proceeding; the
                  amount and timing of future distributions is uncertain.
            (5)   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
                  $13,160 and represents 0.2% of net assets.
            (6)   Bank loan positions may involve multiple underlying tranches. In those instances,
                  the position presented reflects the aggregate of those respective underlying
                  tranches and the rate presented reflects their weighted average rate.
            (7)   Seven-day yield
          ADR     American Depository Receipts
          CAD     Canadian Dollar
           EC     Escrow Cusip; represents a beneficial interest in a residual of pooled assets.
          REIT    Real Estate Investment Trust
           VR     Variable Rate; rate shown is effective rate at period-end.




                   35
T. Rowe Price Small-Cap Value Fund




	


    Affiliated Companies
    ($000s)


    The fund may invest in certain securities that are considered affiliated companies. As defined
    by the 1940 Act, an affiliated company is one in which the fund owns 5% or more of the
    outstanding voting securities, or a company which is under common ownership or control.
    Based on the fund’s relative ownership, the following securities were considered affiliated
    companies for all or some portion of the year ended December 31, 2010. Purchase and sales
    cost and investment income reflect all activity for the period then ended.

                                   Purchase     Sales        Investment           Value
    Affiliate                          Cost      Cost           Income     12/31/10     12/31/09
    3-D Systems                $          -$         -   $            -$      65,184 $      23,391
    Aarons, Class A                     60           -              98        90,706        16,750
    Aarons, Class B                       -          -                -             -       61,838
    Aceto                              973      2,794              283              *        7,467
    Actions Semiconductor
    ADR                                   -     1,305                 -        3,178                 *
    American Vanguard                     -          -              60        17,080        16,600
    Ameron International                  -          -           2,184        39,712        32,999
    Atrion                                -          -           1,869        31,765        27,562
    Breeze-Eastern                        -          -                -        5,459         4,620
    Bridge Capital                     626           -                -        6,113         4,410
    BTU International                     -          -                -        6,832         4,826
    C&D Technologies                      -    31,784                 -             -        2,753
    California Micro Devices              -     7,011                 -             -        6,948
    Capital Senior Living                 -          -                -       12,127         9,086
    Cavco Industries                   679           -                -       28,014        20,834
    Clearwater Paper                      -          -                -       51,286        36,005
    Clearwater Paper
    7.125%, 11/1/18                       -          -              32         2,401                 -
    Clearwater Paper
    10.625%, 6/15/16                      -          -             468         5,141         5,018
    Cobiz Financial                    976           -             104        16,173        11,875
    Cohu                             2,568           -             271        19,730                 *
    Comarco                               -          -                -          280         1,809




                      36
T. Rowe Price Small-Cap Value Fund




	                               Purchase   Sales       Investment          Value
    Affiliate                       Cost    Cost          Income    12/31/10     12/31/09
    Affiliated Companies (continued)
    ($000s)

                                Purchase   Sales       Investment          Value
    Affiliate                       Cost    Cost          Income    12/31/10     12/31/09
    Courier                            -      4              872      16,082      14,810
    CSS Industries                  248      25              590      20,301      18,935
    Culp                            172     159                 -      9,117        8,713
    Cyberoptics                      27      10                 -      5,469        4,290
    Deltic Timber                      -       -             213      39,923      32,723
    Dorman Products                    -       -                -     38,052      16,443
    Ecology                       1,602        -             649      16,946            -
    El Paso Electric              6,479        -                -     60,024            *
    Electro Rent                    353      13            1,231      33,214      23,470
    GTSI                             27        -                -      4,489        4,722
    Hawkins Chemical              1,813        -             370      25,543            *
    Hibbett Sports                   18      14                 -     55,413      33,077
    Hooker Furniture                129        -             383      13,565      11,751
    Innospec                      1,259      85                 -     49,001      23,272
    Insteel Industries            8,592            -          55      11,491            -
    International Shipholding       105        -             849      13,335      16,156
    Kite Realty
    Group Trust, REIT                  -       -           1,200      27,050      20,350
    Kratos Defense &
    Security Solutions            2,113        -                -     15,409      10,233
    K-Tron                             -   2,785                -          -      27,873
    Landauer                           -       -           1,211      33,583      34,384
    Landstar System                    -       -             496     106,853     101,190
    Lydall                             -       -                -     13,283        8,596
    McGrath RentCorp                744        -           1,537      45,466      38,012
    MMC Energy                         -   5,200                -          -           0
    Myers Industries                   -       -             520      19,480      18,200
    Nash Finch                      981      57              596      35,674      30,202
    National American
    University Holdings +         2,367    1,179             424      13,115      12,594




                       37
T. Rowe Price Small-Cap Value Fund




	                        Purchase       Sales   Investment          Value
Affiliate                    Cost        Cost      Income    12/31/10     12/31/09
Affiliated Companies (continued)
($000s)

                         Purchase       Sales   Investment          Value
Affiliate                    Cost        Cost      Income    12/31/10     12/31/09
National Dentex              665        3,418            -          -        2,910
National Interstate          346            -         384      25,870      20,206
New York
Mortgage, REIT                78          13          788       5,286        5,430
On Assignment                760            -            -     17,278      14,085
On Assignment, VR
6.75%, 1/31/13                     -    5,360         195           -        2,992
Orleans Homebuilders               -   19,498            -          -        1,980
OTIX Global                        -    8,044            -          -        1,378
Patriot Transportation
Holdings                  22,671            -            -     24,774            -
Penford                            -        -            -      6,110        8,690
Preferred Bank             6,208            -            -      8,733        1,482
ProAssurance                       -        -            -     96,960            *
Quidel                             -        -            -     29,890      28,504
Raven Industries              82          15        4,044     102,071      68,131
Saba Software              3,159            -            -      9,204            *
Saul Centers, REIT         2,375            -       1,246      43,562            *
Saul Centers, Series A       179            -         137       1,730            *
Shiloh Industries            619            -         108      10,779        4,411
SRI Surgical Express               -    3,695            -          -         820
Stanley Furniture            989           5             -      3,826        9,220
Startek                            -        -            -      4,690        6,919
Stein Mart                   810            -       1,062      19,887            *
Strategic Diagnostics              -        -            -      2,953        2,277
Strattec Security             22          16          345       9,596        5,326
Synalloy                     706            -         171       4,281            *
Terreno Realty, REIT      10,082            -            -      9,144            -
TETRA Technologies                 -        -            -     47,480      44,320
Union Drilling             1,584            -            -      8,554            *




                    38
T. Rowe Price Small-Cap Value Fund




	                                        Purchase           Sales            Investment           Value
    Affiliate                                Cost            Cost               Income     12/31/10     12/31/09
    Affiliated Companies (continued)
    ($000s)

                                         Purchase           Sales            Investment           Value
    Affiliate                                Cost            Cost               Income     12/31/10     12/31/09
    Universal Forest
    Products                                      -              -                 400       38,900       36,810
    USA Truck                                     -              -                    -      13,230       12,520
    Vitran                                   189                 -                    -      15,481       12,647
    Winnebago                                     -              -                    -      30,552       24,522
    Wintrust Financial                    17,505                 -                 239       57,968       36,948
    Zygo                                   1,103            1,870                     -      16,633        9,085
    T. Rowe Price Reserve
    Investment Fund, 0.27%                    ¤                  ¤                 831      355,445     370,585
    Totals                                                               $      26,515 $   2,143,926 $ 1,536,985

     + At December 31, 2009, the issuer's name was Camden Learning.
     * On the date indicated, issuer was held but not considered an affiliated company.
     ¤ Purchase and sale information not shown for cash management funds.
    Amounts reflected on the accompanying financial statements include the following
    amounts related to affiliated companies:



    Investment in securities, at cost                 $   1,454,568
        Dividend income                                     25,819
        Interest income                                        696
    Investment income                                 $     26,515
    Realized gain (loss) on securities                $     (23,255)
    Capital gain distributions from
    mutual funds                                      $              -




The	accompanying	notes	are	an	integral	part	of	these	financial	statements.	


                       39
T. Rowe Price Small-Cap Value Fund
   T. ROWE PRICE SMALL-CAP VALUE FUND
	                                                                                     December	31,	2010
                                                                                     December 31, 2010


       STATEMENT OF ASSETS AND L iabilities
    S tatement of A ssets and LIABILITIES
       ($000s except shares and per share amounts)
    ($000s,	except	shares	and	per	share	amounts)


          Assets
          Investments in securities, at value (cost $4,676,437)                         $ 7,056,444
          Receivable for shares sold                                                            8,831
          Dividends and interest receivable                                                     7,470
          Receivable for investment securities sold                                             7,413
          Other assets                                                                             63
          Total assets                                                                     7,080,221


          Liabilities
          Payable for shares redeemed                                                         14,743
          Investment management fees payable                                                    3,857
          Payable for investment securities purchased                                           1,012
          Due to affiliates                                                                       666
          Other liabilities                                                                       608
          Total liabilities                                                                   20,886


          NET ASSETS                                                                   $ 7,059,335

          Net Assets Consist of:
          Undistributed net investment income                                          $        2,753
          Accumulated undistributed net realized gain                                         67,433
          Net unrealized gain                                                              2,380,007
          Paid-in capital applicable to 195,583,263 shares of $0.01 par value
          capital stock outstanding; 1,000,000,000 shares authorized                       4,609,142


          NET ASSETS                                                                   $ 7,059,335

          NET ASSET VALUE PER SHARE

          Investor Class
          ($5,984,789,613 / 165,665,318 shares outstanding)                            $         36.13
          Advisor Class
          ($1,074,545,065 / 29,917,945 shares outstanding)                             $         35.92




The	accompanying	notes	are	an	integral	part	of	these	financial	statements.	
        The accompanying notes are an integral part of these financial statements.

                    40
T. Rowe Price Small-Cap Value Fund
   T. ROWE PRICE SMALL-CAP VALUE FUND



    STATEMENT OF OPERATIONS
 S tatement of O perations
    ($000s)
 ($000s)

                                                                                                      Year
                                                                                                    Ended
                                                                                                 12/31/10
         Investment Income (Loss)
         Income
           Dividend                                                                          $     87,909
           Interest                                                                                 9,463
           Securities lending                                                                       1,721
           Other                                                                                       12
           Total income                                                                            99,105
         Expenses
           Investment management                                                                   39,801
           Shareholder servicing
             Investor Class                                                  $       8,297
             Advisor Class                                                           1,334          9,631
           Rule 12b-1 fees
             Advisor Class                                                                          2,217
           Prospectus and shareholder reports
             Investor Class                                                           161
             Advisor Class                                                             41             202
           Custody and accounting                                                                     355
           Registration                                                                               113
           Legal and audit                                                                             72
           Directors                                                                                   33
           Miscellaneous                                                                               86
           Total expenses                                                                          52,510
           Expenses paid indirectly                                                                    (2)
           Net expenses                                                                            52,508
         Net investment income                                                                     46,597

         Realized and Unrealized Gain (Loss)
         Net realized gain (loss)
           Securities                                                                             211,642
           Foreign currency transactions                                                               35
           Net realized gain                                                                       211,677
         Change in net unrealized gain on securities                                             1,149,199
         Net realized and unrealized gain                                                        1,360,876

         INCREASE IN NET ASSETS FROM OPERATIONS                                              $ 1,407,473


The	accompanying	notes	are	an	integral	part	of	these	financial	statements.	
        The accompanying notes are an integral part of these financial statements.


                   41
T. Rowe Price Small-Cap Value Fund
   T. ROWE PRICE SMALL-CAP VALUE FUND



    STATEMENT OF CHANGES IN NET ASSETS
 S tatement of C hanges in N et A ssets
    ($000s)
 ($000s)


                                                                                Year
                                                                              Ended
                                                                           12/31/10         12/31/09
       Increase (Decrease) in Net Assets
       Operations
        Net investment income                                      $         46,597     $      38,046
        Net realized gain                                                   211,677             9,896
        Change in net unrealized gain                                     1,149,199         1,137,687
        Increase in net assets from operations                            1,407,473         1,185,629

       Distributions to shareholders
         Net investment income
           Investor Class                                                    (42,362)         (41,939)
           Advisor Class                                                      (5,570)          (5,864)
         Net realized gain
           Investor Class                                                    (84,725)         (11,291)
           Advisor Class                                                     (15,243)          (1,866)
         Decrease in net assets from distributions                          (147,900)         (60,960)

       Capital share transactions*
         Shares sold
           Investor Class                                                    896,001         854,398
           Advisor Class                                                     219,944         275,035
         Distributions reinvested
           Investor Class                                                    120,939          50,374
           Advisor Class                                                      19,703           7,214
         Shares redeemed
           Investor Class                                                   (912,273)        (639,133)
           Advisor Class                                                    (141,615)         (84,469)
         Redemption fees received                                                365              369
         Increase in net assets from capital
         share transactions                                                  203,064         463,788

       Net Assets
       Increase during period                                             1,462,637         1,588,457
       Beginning of period                                                5,596,698         4,008,241
       End of period                                               $       7,059,335    $   5,596,698

       Undistributed net investment income                                      2,753           1,208




       The accompanying notes are an integral part of these financial statements.


                 42
   R ROWE PRICE SMALL-C V VALUE FUND
T. T.owe Price Small-Cap APalue Fund



    STATEMENT OF CHANGES IN NET ASSETS
  S tatement of C hanges in N et A ssets
    ($000s)
  ($000s)

                                                                                 Year
                                                                               Ended
                                                                            12/31/10     12/31/09

        *Share information
          Shares sold
            Investor Class                                                     28,086      35,634
            Advisor Class                                                       6,902      11,834
          Distributions reinvested
            Investor Class                                                       3,410      1,747
            Advisor Class                                                          559        251
          Shares redeemed
            Investor Class                                                    (28,907)    (26,688)
            Advisor Class                                                      (4,485)     (3,405)
          Increase in shares outstanding                                        5,565      19,373




The	accompanying	notes	are	an	integral	part	of	these	financial	statements.	
        The accompanying notes are an integral part of these financial statements.


                   43
T. Rowe Price Small-Cap Value Fund
	                                                                          December	31,	2010




    N otes to F inancial S tatements


       T. Rowe Price Small-Cap Value Fund, Inc. (the fund), is registered under the
       Investment Company Act of 1940 (the 1940 Act) as a diversified, open-end
       management investment company. The fund seeks long-term capital growth by
       investing primarily in small companies whose common stocks are believed to
       be undervalued. The fund has two classes of shares: the Small-Cap Value Fund
       original share class, referred to in this report as the Investor Class, offered since
       June 30, 1988, and the Small-Cap Value Fund – Advisor Class (Advisor Class),
       offered since March 31, 2000. Advisor Class shares are sold only through unaf-
       filiated brokers and other unaffiliated financial intermediaries that are com-
       pensated 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.


NOTE 1 - SIGNIfIcaNT accOuNTING POLIcIES
       Basis of Preparation The accompanying financial statements were prepared in
       accordance with accounting principles generally accepted in the United States
       of America (GAAP), which require the use of estimates made by fund manage-
       ment. Fund management believes that estimates and valuations are appropri-
       ate; however, actual results may differ from those estimates, and the valuations
       reflected in the accompanying financial statements may differ from the value
       ultimately realized upon sale or maturity.
       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. Income tax-related
       interest and penalties, if incurred, would be recorded as income tax expense.
       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 annually. Capital gain distributions, if any, are generally declared
       and paid by the fund annually.



                44
T. Rowe Price Small-Cap Value Fund




    currency Translation Assets, including investments, and liabilities denominated
    in foreign currencies are translated into U.S. dollar values each day at the pre-
    vailing exchange rate, using the mean of the bid and asked prices of such cur-
    rencies 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 prevail-
    ing 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 reflected as
    realized gain on securities in the accompanying financial statements and totaled
    $59,000 for the year ended December 31, 2010. Additionally, the fund earns
    credits on temporarily uninvested cash balances held at the custodian, which
    reduce the fund’s custody charges. Custody expense in the accompanying finan-
    cial statements is presented before reduction for credits, which are reflected as
    expenses paid indirectly.
    Redemption fees A 1% fee is assessed on redemptions of fund shares held
    for 90 days or less to deter short-term trading and to protect the interests of
    long-term shareholders. Redemption fees are withheld from proceeds that
    shareholders receive from the sale or exchange of fund shares. The fees are
    paid to the fund and are recorded as an increase to paid-in capital. The fees
    may cause the redemption price per share to differ from the net asset value
    per share.
    In-kind Redemptions In accordance with guidelines described in the fund’s
    prospectus, the fund may distribute portfolio securities rather than cash as
    payment for a redemption of fund shares (in-kind redemption). For financial
    reporting purposes, the fund recognizes a gain on in-kind redemptions to the
    extent the value of the distributed securities on the date of redemption exceeds
    the cost of those securities. Gains and losses realized on in-kind redemptions
    are not recognized for tax purposes and are reclassified from undistributed


             45
T. Rowe Price Small-Cap Value Fund




    realized gain (loss) to paid-in capital. During the year ended December 31,
    2010, the fund realized $1,109,000 of net gain on $734,000 of in-kind
    redemptions.
    New accounting Pronouncement On January 1, 2010, the fund adopted new
    accounting guidance that requires enhanced disclosures about fair value
    measurements in the financial statements. Adoption of this guidance had
    no impact on the fund’s net assets or results of operations.


NOTE 2 - vaLuaTION
    The fund’s financial instruments are reported at fair value as defined by GAAP.
    The fund determines the values of its assets and liabilities and computes each
    class’s 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.
    valuation Methods Equity securities listed or regularly traded on a securities
    exchange or in the over-the-counter (OTC) market are valued at the last quoted
    sale price or, for certain markets, the official closing price at the time the valu-
    ations 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 deter-
    mined 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 OTC market. Securities with remain-
    ing maturities of one year or more at the time of acquisition are valued at prices
    furnished by dealers who make markets in such securities or by an independent
    pricing service, which considers the yield or price of bonds of comparable qual-
    ity, coupon, maturity, and type, as well as prices quoted by dealers who make
    markets in such securities. Securities with remaining maturities of less than one
    year at the time of acquisition generally use amortized cost in local currency
    to approximate fair value. However, if amortized cost is deemed not to reflect
    fair value or the fund holds a significant amount of such securities with remain-
    ing maturities of more than 60 days, the securities are valued at prices fur-
    nished by dealers who make markets in such securities or by an independent
    pricing service.
    Investments in mutual funds are valued at the mutual fund’s closing net asset
    value per share on the day of valuation.


             46
T. Rowe Price Small-Cap Value Fund




    Other investments, including restricted securities, and those financial instru-
    ments 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.
    For valuation purposes, the last quoted prices of non-U.S. equity securities
    may be adjusted under the circumstances described below. If the fund deter-
    mines 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, the fund will adjust the previous closing prices to reflect
    what it believes to be the fair value of the securities as of the close of the NYSE.
    In deciding whether it is necessary to adjust closing prices to reflect fair value,
    the fund reviews a variety of factors, including developments in foreign mar-
    kets, the performance of U.S. securities markets, and the performance of instru-
    ments trading in U.S. markets that represent foreign securities and baskets of
    foreign securities. A fund may also fair value securities in other situations, such
    as when a particular foreign market is closed but the fund is open. The fund
    uses outside pricing services to provide it with closing prices and information
    to evaluate and/or adjust those prices. The fund cannot predict how often it
    will use closing prices and how often it will determine it necessary to adjust
    those prices to reflect fair value. As a means of evaluating its security valuation
    process, the fund routinely compares closing prices, the next day’s opening
    prices in the same markets, and adjusted prices.
    valuation Inputs Various inputs are used to determine the value of the fund’s
    financial instruments. These inputs are summarized in the three broad levels
    listed below:
    Level 1 – quoted prices in active markets for identical financial instruments
    Level 2 – observable inputs other than Level 1 quoted prices (including, but
              not limited to, quoted prices for similar financial instruments, interest
              rates, prepayment speeds, and credit risk)
    Level 3 – unobservable inputs
    Observable inputs are those based on market data obtained from sources
    independent of the fund, and unobservable inputs reflect the fund’s own
    assumptions based on the best information available. The input levels are




             47
T. Rowe Price Small-Cap Value Fund




    not necessarily an indication of the risk or liquidity associated with financial
    instruments at that level. For example, non-U.S. equity securities actively
    traded in foreign markets generally are reflected in Level 2 despite the avail-
    ability of closing prices because the fund evaluates and determines whether
    those closing prices reflect fair value at the close of the NYSE or require
    adjustment, as described above. The following table summarizes the fund’s
    financial instruments, based on the inputs used to determine their values on
    December 31, 2010:

    ($000s)                                Level 1         Level 2          Level 3    Total value
                                                       Significant      Significant
                                           Quoted      Observable     unobservable
                                            Prices         Inputs           Inputs


    Investments	in	Securities,	
    except:                          $    402,364 $              –$               –$      402,364
      Common	Stocks                      6,358,327         74,762           17,429      6,450,518
      Preferred	Stocks                     21,199           1,622                —         22,821
      Convertible	Preferred	Stocks               –         56,619            5,681         62,300
      Convertible	bonds                          –         75,749                 –        75,749
      Corporate	bonds                            –         36,432                 –        36,432
      bank	Loans                                 –          5,527              733          6,260

    Total                            $   6,781,890 $      250,711 $         23,843 $    7,056,444


    Following is a reconciliation of the fund’s Level 3 holdings for the year ended
    December 31, 2010. Transfers into and out of Level 3 are reflected at the
    value of the financial instrument at the beginning of the period. Gain (loss)
    reflects both realized and change in unrealized gain (loss) on Level 3 holdings
    during the period, if any, and is included on the accompanying Statement of
    Operations. The change in unrealized gain (loss) on Level 3 instruments held at
    December 31, 2010, totaled $1,155,000 for the year ended December 31, 2010.




              48
T. Rowe Price Small-Cap Value Fund




    ($000s)                  Beginning   Gain (Loss)                Net          Transfers          Ending
                               Balance       during           Purchases         In (Out of)        Balance
                               1/1/10        Period          and (Sales)            Level 3       12/31/10
    Investments		
    in	Securities
     Common	Stock        $        108    $    (1,149)        $     18,470	 $             –    $     17,429	
     Preferred	Stock              621	                 –                  –          (621)               –
     bank	Debt                    733	                 –                  –              –            733	
     Convertible	
     Preferred	Stock                –        										(6)       						5,687	            –           5,681	

     T
     	 otal	Level	3      $      1,462	 $      (1,155)        $     24,157	 $         (621)    $     23,843	




NOTE 3 - OTHER INvESTMENT TRaNSacTIONS
    Consistent with its investment objective, the fund engages in the following
    practices to manage exposure to certain risks and/or to 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. Prompt sale of such securities at
    an acceptable price may be difficult and may involve substantial delays and
    additional costs.
    Bank Loans The fund may invest in bank loans, which represent an interest
    in amounts owed by a borrower to a syndication of lenders. Bank loans may
    involve multiple loans with the same borrower under a single credit agreement
    (each loan, a tranche) and each tranche may have different terms and associ-
    ated risks. A bank or other financial institution typically acts as the agent and
    administers a bank loan in accordance with the associated credit agreement.
    Bank loans are generally noninvestment grade and often involve borrowers
    whose financial condition is troubled or uncertain and companies that are
    highly leveraged. The fund may buy and sell bank loans in the form of either
    loan assignments or loan participations. A loan assignment transfers all legal,
    beneficial, and economic rights to the buyer. Although loan assignments




              49
T. Rowe Price Small-Cap Value Fund




    continue to be administered by the agent, the buyer acquires direct rights
    against the borrower. In many cases, a loan assignment requires the consent
    of both the borrower and the agent. In contrast, a loan participation generally
    entitles the buyer to receive the cash flows from principal, interest, and any fee
    payments that the seller is entitled to receive from the borrower; however, the
    seller continues to hold legal title to the loan. As a result, with loan participa-
    tions, the buyer generally has no right to enforce compliance with the terms
    of the credit agreement against the borrower, and the buyer is subject to the
    credit risk of both the borrower and the seller. Bank loans often have extended
    settlement periods, during which the fund is subject to nonperformance by the
    counterparty. A portion of the fund’s bank loans may require additional princi-
    pal to be funded at the borrowers’ discretion at a later date (unfunded commit-
    ments) and bank loans usually may be repaid at any time at the option of the
    borrower. The fund reflects both the funded portion of the bank loan as well
    as any unfunded commitment on the loan in the Portfolio of Investments. At
    December 31, 2010, the fund’s total unfunded commitments were $315,000.
    Securities Lending The fund lends its securities to approved brokers to earn
    additional income. It receives as collateral cash and U.S. government securi-
    ties valued at 102% to 105% of the value of the securities on loan. Cash col-
    lateral is invested by the fund’s lending agent(s) in accordance with investment
    guidelines approved by fund management. Although risk is mitigated by the
    collateral, the fund could experience a delay in recovering its securities and a
    possible loss of income or value if the borrower fails to return the securities or
    if collateral investments decline in value. Securities lending revenue recognized
    by the fund consists of earnings on invested collateral and borrowing fees,
    net of any rebates to the borrower and compensation to the lending agent. In
    accordance with GAAP, investments made with cash collateral are reflected in
    the accompanying financial statements, but collateral received in the form of
    securities are not. At December 31, 2010, there were no securities on loan.
    Other Purchases and sales of portfolio securities other than short-term securities
    aggregated $774,153,000 and $670,426,000, respectively, for the year ended
    December 31, 2010.


NOTE 4 - fEdERaL INcOME TaXES
    No provision for federal income taxes is required since the fund intends to con-
    tinue to qualify as a regulated investment company under Subchapter M of the
    Internal Revenue Code and distribute to shareholders all of its taxable income


             50
T. Rowe Price Small-Cap Value Fund




    and gains. Distributions determined in accordance with federal income 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 but are not
    adjusted for temporary differences.
    The fund files U.S. federal, state, and local tax returns as required. The fund’s
    tax returns are subject to examination by the relevant tax authorities until expi-
    ration of the applicable statute of limitations, which is generally three years after
    the filing of the tax return but which can be extended to six years in certain
    circumstances. Tax returns for open years have incorporated no uncertain tax
    positions that require a provision for income taxes.
    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. Reclassifications
    between income and gain relate primarily to the character of dividends received
    from REIT investments. For the year ended December 31, 2010, the following
    reclassifications were recorded to reflect tax character; there was no impact on
    results of operations or net assets:

    ($000s)


    undistributed	net	investment	income	                                        $	      2,880
    undistributed	net	realized	gain	                                            	     (12,956)
    Paid-in	capital	                                                            	      10,076


    Distributions during the years ended December 31, 2010 and December 31,
    2009 were characterized for tax purposes as follows:

    ($000s)
                                                                  december 31
                                                           2010                      2009
    Ordinary	income                                 	 $	    65,234       	 $	         60,960		
    Long-term	capital	gain                          	 	     82,666       	 	                –


    Total	distributions                             	 $	   147,900       	 $	         60,960		




               51
T. Rowe Price Small-Cap Value Fund




    At December 31, 2010, the tax-basis cost of investments and components of net
    assets were as follows:
    ($000s)

    Cost	of	investments	                                              $	    4,697,527

    unrealized	appreciation		                                         $	    2,704,003
    unrealized	depreciation		                                         	      (345,086)
    net	unrealized	appreciation	(depreciation)	                       	     2,358,917
    undistributed	long-term	capital	gain		                            	        89,907
    Post-October	loss	deferrals	                                      	           (37)
    REIT	income	deferrals	                                            	         1,406
    Paid-in	capital	                                                  	     4,609,142

    net	assets	                                                       $	    7,059,335

    The difference between book-basis and tax-basis net unrealized appreciation
    (depreciation) is attributable to the realization of unrealized gains/losses
    on passive foreign investment companies and the recognition of income on
    contingent debt obligations for tax purposes. In accordance with federal income
    tax regulations applicable to investment companies, recognition of capital and/
    or currency losses on certain transactions realized between November 1 and
    December 31 is deferred for tax purposes until the subsequent year (post-
    October loss deferrals); however, such losses are recognized for financial
    reporting purposes in the year realized. Similarly, certain dividends declared
    by real estate investment trusts (REITs) in December and paid the following
    January are recognized for tax purposes in the subsequent year (REIT income
    deferrals), but for financial reporting purposes are included in the fund’s
    dividend income on ex-date.


NOTE 5 - 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 pro-
    vides 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 a group fee. The group fee rate is calculated
    based on the combined net assets of certain mutual funds sponsored by Price



               52
T. Rowe Price Small-Cap Value Fund




    Associates (the group) applied to a graduated fee schedule, with rates rang-
    ing from 0.48% for the first $1 billion of assets to 0.285% for assets in excess
    of $220 billion. The fund’s group fee is determined by applying the group fee
    rate to the fund’s average daily net assets. At December 31, 2010, the effective
    annual group fee rate was 0.30%.
    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 provides certain other adminis-
    trative services to 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 subac-
    counting and recordkeeping services for certain retirement accounts invested in
    the Investor Class. For the year ended December 31, 2010, expenses incurred
    pursuant to these service agreements were $164,000 for Price Associates;
    $1,488,000 for T. Rowe Price Services, Inc.; and $3,050,000 for T. Rowe Price
    Retirement Plan Services, Inc. The total amount payable at period-end pursuant
    to these service agreements is reflected as Due to Affiliates in the accompanying
    financial statements.
    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 con-
    trol. Pursuant to separate special servicing agreements, expenses associated with
    the operation of the Spectrum and Retirement Funds are borne by each under-
    lying 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 share-
    holder servicing expenses in the accompanying financial statements. For the
    year ended December 31, 2010, the fund was allocated $121,000 of Spectrum
    Funds’ expenses and $1,554,000 of Retirement Funds’ expenses. Of these
    amounts, $1,034,000 related to services provided by Price. The amount pay-
    able at period-end pursuant to this agreement is reflected as Due to Affiliates in
    the accompanying financial statements. At December 31, 2010, approximately
    1% of the outstanding shares of the Investor Class were held by the Spectrum
    Funds and 14% were held by the Retirement Funds.




            53
T. Rowe Price Small-Cap Value Fund




    The fund may invest in the T. Rowe Price Reserve Investment Fund and
    the T. Rowe Price Government Reserve Investment Fund (collectively, the
    T. Rowe Price Reserve Investment Funds), open-end management investment
    companies managed by Price Associates and considered affiliates of the fund.
    The T. Rowe Price Reserve Investment Funds are offered as cash manage-
    ment 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 T. Rowe Price Reserve Investment Funds pay
    no investment management fees.




            54
T. Rowe Price Small-Cap Value Fund




 R eport of I ndependent R egistered P ublic A ccounting F irm


To the Board of directors and Shareholders of
T. Rowe Price Small-cap value fund, Inc.
     In our opinion, the accompanying statement of assets and liabilities, including
     the portfolio of investments, and the related statements of operations and of
     changes in net assets and the financial highlights present fairly, in all material
     respects, the financial position of T. Rowe Price Small-Cap Value Fund, Inc.
     (the “Fund”) at December 31, 2010, the results of its operations for the year
     then ended, the changes in its net assets for each of the two years in the period
     then ended and the financial highlights for each of the five years in the period
     then ended, 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 finan-
     cial statements based on our audits. We conducted our audits of these financial
     statements in accordance with the 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 presenta-
     tion. We believe that our audits, which included confirmation of securities at
     December 31, 2010 by correspondence with the custodian and brokers, and
     confirmation of the underlying funds by correspondence with the transfer
     agent, provide a reasonable basis for our opinion.



     PricewaterhouseCoopers LLP
     Baltimore, Maryland
     February 17, 2011




             55
T. Rowe Price Small-Cap Value Fund




 T ax Information ( U naudited) for the T ax Y ear E nded 12/31/10

  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:

  •	$21,534,000	from	short-term	capital	gains.

    $
  •		 90,281,000	from	long-term	capital	gains,	of	which	$90,019,000	was	subject	to	the	
    15%	rate	gains	category,	and	$262,000	to	the	25%	rate	gains	category.

  For	taxable	non-corporate	shareholders,	$63,047,000	of	the	fund’s	income	represents	
  qualified	dividend	income	subject	to	the	15%	rate	category.

  For	corporate	shareholders,	$57,933,000	of	the	fund’s	income	qualifies	for	the	dividends-
  received	deduction.


 I nformation on P roxy V oting P olicies, P rocedures, and R ecords

  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	website,	sec.gov.	The	description	of	our	proxy	voting	policies	
  and	procedures	is	also	available	on	our	website,	troweprice.com.	To	access	it,	click	on		
  the	words	“Our	Company”	at	the	top	of	our	corporate	homepage.	Then,	when	the	next	
  page	appears,	click	on	the	words	“Proxy	Voting	Policies”	on	the	left	side	of	the	page.

  Each	fund’s	most	recent	annual	proxy	voting	record	is	available	on	our	website	and	
  through	the	SEC’s	website.	To	access	it	through	our	website,	follow	the	directions	above,	
  then	click	on	the	words	“Proxy	Voting	Records”	on	the	right	side	of	the	Proxy	Voting	
  Policies	page.


 H ow to O btain Q uarterly P ortfolio H oldings

  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	website	(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.	




               56
T. Rowe Price Small-Cap Value Fund
	




    A bout the F und’s D irectors and O fficers


Your	fund	is	overseen	by	a	board	of	Directors	(board)	that	meets	regularly	to	review	a	wide	variety	of	
matters	affecting	the	fund,	including	performance,	investment	programs,	compliance	matters,	advisory	
fees	and	expenses,	service	providers,	and	other	business	affairs.	The	board	elects	the	fund’s	officers,	
who	are	listed	in	the	final	table.	At	least	75%	of	the	board’s	members	are	independent	of	T.	Rowe	
Price	Associates,	Inc.	(T.	Rowe	Price),	and	T.	Rowe	Price	International	Ltd	(T.	Rowe	Price	International);	
“inside”	or	“interested”	directors	are	employees	or	officers	of	T.	Rowe	Price.	The	business	address	
of	each	director	and	officer	is	100	East	Pratt	Street,	baltimore,	Maryland	21202.	The	Statement	of	
Additional	Information	includes	additional	information	about	the	fund	directors	and	is	available	with-
out	charge	by	calling	a	T.	Rowe	Price	representative	at	1-800-225-5132.

    Independent directors
    Name
    (year of Birth)              Principal Occupation(s) and directorships of Public companies and
    year Elected*                Other Investment companies during the Past five years
    William	R.	brody,	M.D.,	     President	and	Trustee,	Salk	Institute	for	biological	Studies	(2009	
    Ph.D.                        to	present);	Director,	novartis,	Inc.	(2009	to	present);	Director,	IbM	
    (1944)                       (2007	to	present);	President	and	Trustee,	Johns	hopkins	university	
    2009                         (1996	to	2009);	Chairman	of	Executive	Committee	and	Trustee,	
                                 Johns	hopkins	health	System	(1996	to	2009);	Director,	Medtronic,	
                                 Inc.	(1998	to	2007);	Director,	Mercantile	bankshares	(1997	to	2007)
    Jeremiah	E.	Casey            Director,	national	Life	Insurance	(2001	to	2005);	Director,	nLV	
    (1940)                       Financial	Corporation	(2004	to	2005)
    2005
    Anthony	W.	Deering           Chairman,	Exeter	Capital,	LLC,	a	private	investment	firm	(2004	
    (1945)                       to	present);	Director,	under	Armour	(2008	to	present);	Director,	
    2001                         Vornado	Real	Estate	Investment	Trust	(2004	to	present);	Director,	
                                 Mercantile	bankshares	(2002	to	2007);	Member,	Advisory	board,	
                                 Deutsche	bank	north	America	(2004	to	present)
    Donald	W.	Dick,	Jr.          Principal,	EuroCapital	Partners,	LLC,	an	acquisition	and	management	
    (1943)                       advisory	firm	(1995	to	present)
    1994
    Karen	n.	horn                Senior	Managing	Director,	brock	Capital	Group,	an	advisory	and	
    (1943)                       investment	banking	firm	(2004	to	present);	Director,	Eli	Lilly	and	
    2003                         Company	(1987	to	present);	Director,	Simon	Property	Group	(2004	
                                 to	present);	Director,	norfolk	Southern	(2008	to	present);	Director,	
                                 Fannie	Mae	(2006	to	2008);	Director,	Georgia	Pacific	(2004	to	2005)
    Theo	C.	Rodgers              President,	A&R	Development	Corporation	(1977	to	present)
    (1941)
    2005

     E
    *	 ach	independent	director	oversees	128	T.	Rowe	Price	portfolios	and	serves	until	retirement,		
     resignation,	or	election	of	a	successor.




                      57
T. Rowe Price Small-Cap Value Fund
	




    Independent directors (continued)
    Name
    (year of Birth)               Principal Occupation(s) and directorships of Public companies and
    year Elected*                 Other Investment companies during the Past five years
    John	G.	Schreiber             Owner/President,	Centaur	Capital	Partners,	Inc.,	a	real	estate	
    (1946)                        investment	company	(1991	to	present);	Cofounder	and	Partner,	
    2001                          blackstone	Real	Estate	Advisors,	L.P.	(1992	to	present)
    Mark	R.	Tercek                President	and	Chief	Executive	Officer,	The	nature	Conservancy		
    (1957)                        (2008	to	present);	Managing	Director,	The	Goldman	Sachs	Group,	
    2009                          Inc.	(1984	to	2008)

     E
    *	 ach	independent	director	oversees	128	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) and directorships of Public companies and
    Portfolios Overseen]          Other Investment companies during the Past five years
    Edward	C.	bernard             Director	and	Vice	President,	T.	Rowe	Price;	Vice	Chairman	of	the	
    (1956)                        board,	Director,	and	Vice	President,	T.	Rowe	Price	Group,	Inc.;	
    2006                          Chairman	of	the	board,	Director,	and	President,	T.	Rowe	Price	
    [128]                         Investment	Services,	Inc.;	Chairman	of	the	board	and	Director,		
                                  T.	Rowe	Price	Retirement	Plan	Services,	Inc.,	T.	Rowe	Price		
                                  Savings	bank,	and	T.	Rowe	Price	Services,	Inc.;	Director	and	Chief	
                                  Executive	Officer,	T.	Rowe	Price	International;	Chief	Executive		
                                  Officer,	Chairman	of	the	board,	Director,	and	President,	T.	Rowe	
                                  Price	Trust	Company;	Chairman	of	the	board,	all	funds
    John	h.	Laporte,	CFA          Vice	President,	T.	Rowe	Price,	T.	Rowe	Price	Group,	Inc.,	and	
    (1945)                        T.	Rowe	Price	Trust	Company
    1994
    [16]

    *Each	inside	director	serves	until	retirement,	resignation,	or	election	of	a	successor.




                      58
T. Rowe Price Small-Cap Value Fund
	




    Officers
    Name (year of Birth)
    Position Held With Small-cap value fund          Principal Occupation(s)
    Preston	G.	Athey,	CFA,	CIC	(1949)                Vice	President,	T.	Rowe	Price,	T.	Rowe	Price	
    President                                        Group,	Inc.,	and	T.	Rowe	Price	Trust	Company
    hugh	M.	Evans	III,	CFA	(1966)                    Vice	President,	T.	Rowe	Price	and	T.	Rowe	Price	
    Vice	President	                                  Group,	Inc.
    Roger	L.	Fiery	III,	CPA	(1959)                   Vice	President,	Price	hong	Kong,	Price	
    Vice	President                                   Singapore,	T.	Rowe	Price,	T.	Rowe	Price	Group,	
                                                     Inc.,	T.	Rowe	Price	International,	and	T.	Rowe	
                                                     Price	Trust	Company
    Christopher	T.	Fortune	(1973)                    Vice	President,	T.	Rowe	Price	and	T.	Rowe	Price	
    Vice	President	                                  Group,	Inc.
    John	R.	Gilner	(1961)                            Chief	Compliance	Officer	and	Vice	President,	
    Chief	Compliance	Officer                         T.	Rowe	Price;	Vice	President,	T.	Rowe	Price	
                                                     Group,	Inc.,	and	T.	Rowe	Price	Investment	
                                                     Services,	Inc.	
    Gregory	S.	Golczewski	(1966)                     Vice	President,	T.	Rowe	Price	and	T.	Rowe	Price	
    Vice	President                                   Trust	Company
    Gregory	K.	hinkle,	CPA	(1958)                    Vice	President,	T.	Rowe	Price,	T.	Rowe	Price	
    Treasurer                                        Group,	Inc.,	and	T.	Rowe	Price	Trust	Company;	
                                                     formerly	Partner,	PricewaterhouseCoopers	LLP	
                                                     (to	2007)
    Steven	Krichbaum	(1977)                          Vice	President,	T.	Rowe	Price	and	T.	Rowe	Price	
    Vice	President                                   Group,	Inc.;	formerly	student,	university	of	
                                                     Michigan,	Stephen	M.	Ross	School	of	business	
                                                     (to	2007)
    Patricia	b.	Lippert	(1953)                       Assistant	Vice	President,	T.	Rowe	Price	and		
    Secretary                                        T.	Rowe	Price	Investment	Services,	Inc.
    Gregory	A.	McCrickard,	CFA	(1958)                Vice	President,	T.	Rowe	Price,	T.	Rowe	Price	
    Vice	President	                                  Group,	Inc.,	and	T.	Rowe	Price	Trust	Company
    David	Oestreicher	(1967)                         Director	and	Vice	President,	T.	Rowe	Price	
    Vice	President                                   Investment	Services,	Inc.,	T.	Rowe	Price	Trust	
                                                     Company,	T.	Rowe	Price	Services,	Inc.;	Vice	
                                                     President,	Price	hong	Kong,	Price	Singapore,		
                                                     T.	Rowe	Price,	T.	Rowe	Price	Group,	Inc.,		
                                                     T.	Rowe	Price	International,	and	T.	Rowe	Price	
                                                     Retirement	Plan	Services,	Inc.

    unless	otherwise	noted,	officers	have	been	employees	of	T.	Rowe	Price	or	T.	Rowe	Price	
    International	for	at	least	5	years.




                    59
T. Rowe Price Small-Cap Value Fund
	




    Officers (continued)
    Name (year of Birth)
    Position Held With Small-cap value fund          Principal Occupation(s)
    Curt	J.	Organt,	CFA	(1968)                       Vice	President,	T.	Rowe	Price	and	T.	Rowe	Price	
    Vice	President                                   Group,	Inc.
    Deborah	D.	Seidel	(1962)                         Vice	President,	T.	Rowe	Price,	T.	Rowe	Price	
    Vice	President                                   Group,	Inc.,	and	T.	Rowe	Price	Investment	
                                                     Services,	Inc.;	Vice	President	and	Assistant	
                                                     Treasurer,	T.	Rowe	Price	Services,	Inc.
    J.	David	Wagner,	CFA	(1974)                      Vice	President,	T.	Rowe	Price	and	T.	Rowe	Price	
    Vice	President                                   Group,	Inc.
    Julie	L.	Waples	(1970)                           Vice	President,	T.	Rowe	Price
    Vice	President
    Kwame	C.	Webb	(1982)                             Vice	President,	T.	Rowe	Price	and	T.	Rowe	Price	
    Vice	President                                   Group,	Inc.

    unless	otherwise	noted,	officers	have	been	employees	of	T.	Rowe	Price	or	T.	Rowe	Price	
    International	for	at	least	5	years.




                   60
T. Rowe Price Investment Services and Information
This	page	contains	supplementary	information	that	is	not	part	of	the	shareholder	report.



Investment Services and Information
         kNOWLEdGEaBLE SERvIcE REPRESENTaTIvES
         By Phone: 1-800-225-5132. Available Monday through Friday from 8 a.m. until
         10 p.m. ET and Saturday from 8:30 a.m. until 5 p.m. ET.
         In Person at a T. Rowe Price Investor Center. Please visit the Web at
         troweprice.com/investorcenter or call 1-800-225-5132 to locate a center near you.
         accOuNT SERvIcES
         Automated 24-Hour Services Including Tele*Accesssm and account access
         through the T. Rowe Price website at troweprice.com.
         Automatic Investing. From your bank account or paycheck.
         Automatic Withdrawal. Scheduled, periodic redemptions.
         IRA Rebalancing. Automatically rebalance to ensure that your accounts reflect
         your desired asset allocations.
         BROkERaGE SERvIcES ‡
         Trade stocks, mutual funds, ETFs, bonds, options, CDs, precious metals,
         and more at competitive commissions.
         INvESTMENT INfORMaTION
         Consolidated Statement. Overview of all of your accounts.
         Shareholder Reports. Manager reviews of their strategies and results.
         T. Rowe Price Report. Quarterly investment newsletter.
         T. Rowe Price Investor. Quarterly publication of insightful financial articles.
         Investment Guides. International Investing Guide; Guide to Bond Funds;
         Retirement Savings Guide; and Retirement Readiness Guide.
         fINaNcIaL INTERMEdIaRIES aNd advISORS
         By Phone: 1-877-804-2315. Contact us Monday through Friday from 8:30 a.m.
         until 6 p.m. ET.
         By Mail: T. Rowe Price, Financial Institution Services, P.O. Box 89000, Baltimore,
         MD 21289-4232.
         cuSTOMERS WHO TRadE THROuGH a fINaNcIaL INTERMEdIaRy
         Please contact your intermediary or financial professional for assistance.




	     ‡	 	 ptions	trading	involves	additional	risk	and	is	not	suitable	for	all	investors.	brokerage		
         O
         services	offered	by	T.	Rowe	Price	Investment	Services,	Inc.,	member	FInRA/SIPC.
                   61
T. Rowe Price Mutual Funds
This	page	contains	supplementary	information	that	is	not	part	of	the	shareholder	report.
STOck fuNdS                            aSSET aLLOcaTION fuNdS (cont.) MONEy MaRkET fuNdS
domestic                               Retirement 2025 *                       Taxable
Blue Chip Growth*                      Retirement 2030 *                       Prime Reserve
Capital Appreciation*                  Retirement 2035 *                       Summit Cash Reserves
Capital Opportunity*                   Retirement 2040 *                       U.S. Treasury Money
Diversified Mid-Cap Growth             Retirement 2045 *
                                                                               Tax-free
Diversified Small-Cap Growth           Retirement 2050 *
Dividend Growth*                       Retirement 2055 *                       California Tax-Free Money
Equity Income*                         Retirement Income *                     Maryland Tax-Free Money
Equity Index 500                                                               New York Tax-Free Money
Extended Equity Market Index           BONd fuNdS                              Summit Municipal Money Market
Financial Services                                                             Tax-Exempt Money
Growth & Income                        domestic Taxable
Growth Stock*                          Corporate Income                        INTERNaTIONaL/GLOBaL
Health Sciences                        GNMA                                    fuNdS
Media & Telecommunications             High Yield*
Mid-Cap Growth* ‡                      Inflation Protected Bond                Stock
Mid-Cap Value* ‡                       New Income *                            Africa & Middle East
New America Growth*                    Short-Term Bond *                       Emerging Europe & Mediterranean
New Era                                Spectrum Income                         Emerging Markets Stock
New Horizons                           Strategic Income *                      European Stock
Real Estate*                           Summit GNMA                             Global Infrastructure*
Science & Technology*                  U.S. Bond Index                         Global Large-Cap Stock *
Small-Cap Stock*                       U.S. Treasury Intermediate              Global Real Estate*
Small-Cap Value*                       U.S. Treasury Long-Term                 Global Stock *
Spectrum Growth                        domestic Tax-free                       Global Technology
Tax-Efficient Equity                                                           International Discovery
Total Equity Market Index              California Tax-Free Bond                International Equity Index
U.S. Large-Cap Core*                   Georgia Tax-Free Bond                   International Growth & Income *
Value*                                 Maryland Short-Term                     International Stock*
                                         Tax-Free Bond                         Japan
aSSET aLLOcaTION fuNdS                 Maryland Tax-Free Bond                  Latin America
                                       New Jersey Tax-Free Bond                New Asia
Balanced                               New York Tax-Free Bond                  Overseas Stock
Personal Strategy Balanced             Summit Municipal Income                 Spectrum International
Personal Strategy Growth               Summit Municipal Intermediate
Personal Strategy Income               Tax-Free High Yield                     Bond
Retirement 2005*                       Tax-Free Income *                       Emerging Markets Bond
Retirement 2010*                       Tax-Free Short-Intermediate             International Bond *
Retirement 2015*                       Virginia Tax-Free Bond
Retirement 2020*
For more information about T. Rowe Price funds or services, please contact us directly at
1-800-225-5132. Request a prospectus or summary prospectus; each includes investment objectives,
risks, fees, expenses, and other information that you should read and consider carefully before investing.
Investments in the money market funds are not insured or guaranteed by the FDIC or any other
government agency. Although the funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the funds.
 * T.	Rowe	Price	Advisor	and	R	Classes	may	be	available	for	these	funds.	T.	Rowe	Price	Advisor	and		
   R	Classes	are	offered	only	through	financial	intermediaries.	For	more	information	about	T.	Rowe	Price	
   Advisor	and	R	Classes,	contact	your	financial	professional	or	call	T.	Rowe	Price	at	1-877-804-2315.
 ‡ Closed	to	new	investors	except	for	a	direct	rollover	from	a	retirement	plan	into	a	T.	Rowe	Price	IRA	
   invested	in	this	fund.

                                                    T.	Rowe	Price	Investment	Services,	Inc.		
                                                    100	East	Pratt	Street	
                                                    baltimore,	MD	21202
103832                                                                                            F46-050 2/11

				
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