Item 1. Report to Shareholders T. Rowe Price Small-Cap Stock Fund - -------------------------------------------------------------------------------- December 31, 2003 Certified Annual Report This report is certified under the Sarbanes-Oxley Act of 2002, which requires that public companies, including mutual funds, affirm that the information provided in their annual and semiannual shareholder reports fully and fairly represents their financial position. T. Rowe Price Small-Cap Stock Fund - -------------------------------------------------------------------------------- Certified Annual Report Performance Comparison - -------------------------------------------------------------------------------- This chart shows the value of a hypothetical $10,000 investment in the fund over the past 10 fiscal year periods or since inception (for funds lacking 10-year records). The result is compared with benchmarks, which may include a broad-based market index and a peer group average or index. Market indexes do not include expenses, which are deducted from fund returns as well as mutual fund averages and indexes. [Graphic Omitted] SMALL-CAP STOCK FUND Lipper Small-Cap Core Funds Index $28,687 Small-Cap Stock Fund $32,670 Russell 2000 Index $24,721 Russell 2000 Lipper Small-Cap Small-Cap Index Core Funds Index Stock Fund 12/93 10,000 10,000 10,000 12/94 9,818 10,016 10,008 12/95 12,611 13,096 13,396 12/96 14,691 15,546 16,216 12/97 17,976 19,002 20,888 12/98 17,519 18,311 20,167 12/99 21,243 22,005 23,124 12/00 20,601 23,531 26,937 12/01 21,113 25,207 28,772 12/02 16,788 20,360 24,685 12/03 24,721 28,687 32,670 Note: Performance for Advisor Class shares will vary due to the differing fee structure.See returns table below. Average Annual Compound Total Return - -------------------------------------------------------------------------------- Since Inception Periods Ended 12/31/03 1 Year 5 Years 10 Years Inception Date - -------------------------------------------------------------------------------- Small-Cap Stock Fund 32.35% 10.13% 12.57% - - Russell 2000 Index 47.25 7.13 9.47 Lipper Small-Cap Core Funds Index 40.90 9.39 11.11 S&P 500 Stock Index 28.68 -0.57 11.07 Small-Cap Stock Fund- Advisor Class 32.06 - - 6.94% 3/31/00 Russell 2000 Index 47.25 - - 2.24* Lipper Small-Cap Core Funds Index 40.90 - - 4.55* S&P 500 Stock Index 28.68 - - -6.25* * Benchmark since-inception data are for the time period 3/31/00-12/31/03. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. Past performance cannot guarantee future results. T. Rowe Price Small-Cap Stock Fund - -------------------------------------------------------------------------------- Certified Annual Report Dear Shareholders, We are pleased to report that the Small-Cap Stock Fund and the Small-Cap Stock Fund-Advisor Class generated solid returns in 2003, as shown in the table on the preceding page. Our results trailed the returns of the Russell 2000 Index and the Lipper Small-Cap Core Funds Index. The fund's underperformance is largely attributable to our somewhat conservative investment approach, which emphasizes value and reasonably priced growth stocks rather than the more speculative stocks that led the market in 2003. Over longer time periods, as shown in the table, the fund has outperformed both benchmarks. As you know, the fund's objective is to seek long-term growth of capital through investments primarily in small companies. By combining a growth- and value-focused investment strategy, the fund should be less volatile than one using a growth-only approach. [Graphic Omitted] Major Index Returns Period Ended 12/31/03 12-Month Return S&P 500 Stock Index 28.68% S&P MidCap 400 Index 35.62% Russell 2000 Index 47.25% Nasdaq Composite Index 50.01% The Major Index Returns table shows how various domestic market indexes performed over the fund's fiscal year. As you can see, the small-cap Russell 2000 Index and the Nasdaq Composite Index, which is heavily weighted with technology stocks, produced very strong returns in 2003. Large- and mid-cap stocks, as measured by the S&P 500 Index and S&P MidCap 400 Index, respectively, were less robust. The Top 5 Sectors table shows how our weightings among the fund's top five sectors changed over the last year. The most significant changes were a reduction in our exposure to the financial sector and an increase in our health care weighting. Top 5 Sectors - -------------------------------------------------------------------------------- Percent of Net Assets Periods Ended 12/31/02 12/31/03 - -------------------------------------------------------------------------------- Information Technology 20.4% 20.9% Industrials and Business Services 17.6 16.8 Financials 18.0 15.0 Consumer Discretionary 12.1 11.9 Health Care 8.8 10.3 For comparison purposes, we have restated the historical weightings to incorporate changes to the sector and industry classification system. The Best and Worst Contributors table shows the five best and worst contributors to the fund's performance in 2003. The largest contributors to performance were audio systems maker Harman International, swimming pool supplies distributor SCP Pool, labor management software systems provider Kronos, retailer AnnTaylor Stores, and managed health care provider Mid Atlantic Medical Services. The largest detractors were online retailer Alloy Online, parking facilities operator Central Parking, biotechnology companies Trimeris and Vertex Pharmaceuticals, and apparel label maker Paxar. Best and Worst Contributors - -------------------------------------------------------------------------------- 12 Months Ended 12/31/03 Best Contributors - -------------------------------------------------------------------------------- Harman International SCP Pool Kronos AnnTaylor Stores * Mid Atlantic Medical Services * Worst Contributors - -------------------------------------------------------------------------------- Alloy Online Central Parking Trimeris Vertex Pharmaceuticals Paxar * Position added Finally, I'm sure you are aware that mutual fund companies have recently come under scrutiny for their trading policies. The investigations have led to allegations that executives of several mutual fund companies permitted or engaged in improper mutual fund trading. In addition, certain intermediaries that process fund transactions are alleged to have assisted some investors in executing improper mutual fund trades. I want T. Rowe Price shareholders to know that we emphatically condemn the abuses that have been revealed or alleged against other firms in our industry. Our firm has not entered and will not enter into any agreements with any investors or intermediaries that authorize after-hours trading or excessive short-term trading in any of our funds. T. Rowe Price investors can be assured that our firm unequivocally opposes illegal or inappropriate trading of any nature and has policies and procedures in place designed to protect the best interests of our long-term shareholders. No T. Rowe Price executives or portfolio managers or investment personnel of the T. Rowe Price mutual funds have engaged in any inappropriate trading of T. Rowe Price mutual funds. You may find out more about our trading policies and the steps we take to protect your interests by visiting our Web site (troweprice.com). These policies are also spelled out in your fund's prospectus. Thank you for your continued support. Respectfully submitted, James S. Riepe Chairman January 20, 2004 T. Rowe Price Small-Cap Stock Fund - -------------------------------------------------------------------------------- Certified Annual Report Financial Highlights For a share outstanding throughout each period - -------------------------------------------------------------------------------- Small-Cap Stock class Year Ended 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 NET ASSET VALUE Beginning of period $ 21.50 $ 25.34 $ 23.87 $ 22.80 $ 20.79 Investment activities Net investment income (loss) (0.02) 0.01 0.10 0.15 0.09 Net realized and unrealized gain (loss) 6.96 (3.61) 1.52 3.52 2.89 Total from investment activities 6.94 (3.60) 1.62 3.67 2.98 Distributions Net investment income -- (0.01) (0.10) (0.14) (0.08) Net realized gain (0.46) (0.23) (0.05) (2.46) (0.89) Total distributions (0.46) (0.24) (0.15) (2.60) (0.97) NET ASSET VALUE End of period $ 27.98 $ 21.50 $ 25.34 $ 23.87 $ 22.80 ----------------------------------------------------- Ratios/Supplemental Data Total return^ 32.35% (14.21)% 6.81% 16.49% 14.66% Ratio of total expenses to average net assets 0.96% 0.96% 0.98% 0.94% 0.96% Ratio of net investment income (loss) to average net assets (0.10)% 0.04% 0.45% 0.63% 0.47% Portfolio turnover rate 16.3% 15.3% 16.5% 32.8% 42.3% Net assets, end of period (in millions) $ 4,864 $ 3,298 $ 3,158 $ 2,255 $ 1,740 ^ Total return reflects the rate that an investor would have earned on an investment in the fund during each period, assuming reinvestment of all distributions. The accompanying notes are an integral part of these financial statements. T. Rowe Price Small-Cap Stock Fund - -------------------------------------------------------------------------------- Certified Annual Report Financial Highlights For a share outstanding throughout each period - -------------------------------------------------------------------------------- Advisor Class Year 3/31/00 Ended Through 12/31/03 12/31/02 12/31/01 12/31/00 NET ASSET VALUE Beginning of period $ 21.44 $ 25.32 $ 23.89 $ 24.93 Investment activities Net investment income (loss) (0.05) (0.02) 0.04 0.07 Net realized and unrealized gain (loss) 6.91 (3.63) 1.53 1.53 Total from investment activities 6.86 (3.65) 1.57 1.60 Distributions Net investment income -- -- (0.09) (0.18) Net realized gain (0.42) (0.23) (0.05) (2.46) Total distributions (0.42) (0.23) (0.14) (2.64) NET ASSET VALUE End of period $ 27.88 $ 21.44 $ 25.32 $ 23.89 -------------------------------------------------- Ratios/Supplemental Data Total return^ 32.06% (14.41)% 6.60% 6.79% Ratio of total expenses to average net assets 1.19% 1.19% 1.16% 0.82%! Ratio of net investment income (loss) to average net assets (0.33)% (0.13)% 0.26% 0.85%! Portfolio turnover rate 16.3% 15.3% 16.5% 32.8%! Net assets, end of period (in thousands) $ 319,096 $ 141,005 $ 38,632 $ 7,479 ^ Total return reflects the rate that an investor would have earned on an investment in the fund during each period, assuming reinvestment of all distributions. ! Annualized The accompanying notes are an integral part of these financial statements. T. Rowe Price Small-Cap Stock Fund - -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 Portfolio of Investments (ss.) Shares/Par Value - -------------------------------------------------------------------------------- ($ 000s) COMMON STOCKS 92.0% CONSUMER DISCRETIONARY 11.9% Auto Components 0.5% Keystone Automotive * 640,300 16,238 Strattec Security *! 190,600 11,609 27,847 Automobiles 0.1% Winnebago 42,600 2,929 2,929 Hotels, Restaurants & Leisure 3.0% Applebee's 471,675 18,523 CEC Entertainment * 376,000 17,818 Chicago Pizza & Brewery * 296,300 4,421 Red Robin Gourmet Burgers * 277,500 8,447 Ruby Tuesday 1,389,800 39,595 Sonic * 878,500 26,900 The Cheesecake Factory * 864,000 38,042 153,746 Household Durables 0.8% Harman International 436,200 32,270 Jarden Corporation * 342,900 9,375 41,645 Internet & Catalog Retail 0.1% Alloy Online * 405,000 2,110 priceline.com * 100,000 1,790 3,900 Leisure Equipment & Products 2.2% Brunswick 1,220,200 38,839 MarineMax * 672,000 13,057 Polaris Industries 240,000 21,259 SCP Pool * 1,252,919 40,946 114,101 Media 1.9% Emmis Communications * 644,300 17,428 Entercom Communications * 238,500 12,631 Getty Images * 186,000 9,324 Scholastic * 1,353,800 46,084 Sinclair Broadcast Group, Class A * 215,700 3,218 Young Broadcasting, Class A * 430,700 8,631 97,316 Multiline Retail 0.7% Neiman Marcus, Class A * 714,300 38,336 38,336 Specialty Retail 2.2% AC Moore Arts & Crafts * 303,300 5,841 AnnTaylor Stores * 1,375,000 53,625 Christopher & Banks 923,950 18,045 Linens 'n Things * 673,900 20,271 The Finish Line, Class A * 250,000 7,492 Too * 350,000 5,908 Ultimate Electronics * 337,800 2,577 113,759 Textiles, Apparel, & Luxury Goods 0.4% Culp * 209,900 2,288 Dan River, Class A * 962,400 703 Stride Rite 1,200,000 13,656 Unifi * 908,400 5,859 22,506 Total Consumer Discretionary 616,085 CONSUMER STAPLES 2.4% Food & Staples Retailing 1.9% Casey's General Stores 2,448,000 43,232 Great Atlantic & Pacific Tea Company * 1,330,000 11,172 Performance Food Group * 981,700 35,508 Wild Oats Markets * 881,900 11,403 101,315 Food Products 0.4% ADM Cranberry *!!@ 164 53 American Italian Pasta, Class A * 274,000 11,480 International Multifoods * 141,100 2,540 Makepeace *@ 164 984 Seneca Foods Class A * 187,600 4,033 Class B * 72,000 1,602 20,692 Personal Products 0.1% Chattem * 243,000 4,350 4,350 Total Consumer Staples 126,357 ENERGY 7.0% Energy Equipment & Services 4.7% Atwood Oceanics * 577,000 18,429 Cooper Cameron * 103,300 4,814 FMC Technologies * 1,724,200 40,174 Grant Prideco * 2,981,450 38,818 Hanover Compressor * 850,000 9,478 Hydril * 373,300 8,933 Key Energy Services * 668,100 6,888 Lone Star Technologies * 405,700 6,483 National Oilwell * 2,401,700 53,702 Seacor Smit * 899,500 37,806 Smith International * 260,200 10,804 W-H Energy Services * 473,900 7,677 244,006 Oil & Gas 2.3% Forest Oil * 1,210,100 34,573 Noble Energy 859,400 38,183 Tom Brown * 925,000 29,831 Ultra Petroleum * 588,500 14,489 117,076 Total Energy 361,082 FINANCIALS 15.0% Capital Markets 0.8% Investor's Financial Services 751,000 28,846 National Financial Partners 338,000 9,312 38,158 Commercial Banks 5.5% Boston Private Financial 575,400 14,293 Chittenden 1,758,150 59,144 Citizens Banking 1,476,600 48,314 Glacier Bancorp 404,589 13,109 Provident Bankshares 952,078 28,029 Southwest Bancorp, (Texas) 858,500 33,353 Valley National Bancorp 1,378,091 40,240 WestAmerica 1,000,000 49,700 286,182 Insurance 5.2% Aspen Insurance Holdings * 249,000 6,178 Brown and Brown 760,000 24,784 Harleysville Group 441,200 8,776 Horace Mann Educators ! 2,139,100 29,883 Infinity Property & Casualty 719,000 23,763 Markel * 111,500 28,266 Ohio Casualty * 2,365,800 41,070 PartnerRe 770,600 44,733 Selective Insurance 870,000 28,153 Triad Guaranty * 290,000 14,602 W. R. Berkley 586,000 20,481 270,689 Real Estate 3.5% Arden Realty, REIT 739,200 22,427 EastGroup Properties, REIT 887,600 28,740 Essex Property Trust, REIT 100,000 6,422 Gables Residential Trust, REIT 792,600 27,535 Glenborough Realty Trust, REIT 775,000 15,461 LaSalle Hotel Properties, REIT 495,400 9,190 Manufactured Home Communities, REIT 315,000 11,860 Parkway Properties, REIT ! 599,700 24,948 Reckson Associates Realty, REIT 265,900 6,461 Washington, REIT 971,300 28,362 181,406 Thrifts & Mortgage Finance 0.0% Frankfort First 61,400 1,277 1,277 Total Financials 777,712 HEALTH CARE 10.3% Biotechnology 3.0% Abgenix * 96,000 1,196 Alexion Pharmaceutical * 100,000 1,702 Alkermes * 938,700 12,672 Amylin Pharmaceuticals * 440,000 9,777 Cephalon * 353,517 17,114 Cubist Pharmaceuticals * 922,200 11,214 CV Therapeutics * 104,300 1,529 deCODE GENETICS * 471,703 3,863 Exelixis * 819,700 5,803 Incyte * 171,800 1,175 Myriad Genetics * 1,000,000 12,860 Neurocrine Biosciences * 437,500 23,861 NPS Pharmaceuticals * 289,000 8,884 ONYX Pharmaceuticals * 214,700 6,061 OSI Pharmaceuticals * 124,200 4,001 Regeneron Pharmaceuticals * 269,700 3,967 Trimeris * 391,900 8,222 Tularik * 415,000 6,702 Vertex Pharmaceuticals * 1,319,620 13,500 ViroPharma * 163,200 454 154,557 Health Care Equipment & Supplies 2.8% Analogic 409,500 16,790 DJ Orthopedics * 300,000 8,040 Edwards Lifesciences * 589,900 17,744 EPIX Medical * 190,000 3,093 Integra LifeServices Holdings * 100,000 2,863 Matthews International, Class A 1,419,600 42,006 Nektar Therapeutics * 175,100 2,383 Steris * 1,050,100 23,733 Thoratec * 525,000 6,830 Wilson Greatbatch Technologies * 487,300 20,598 144,080 Health Care Providers & Services 3.6% Cross Country Healthcare * 190,800 2,847 Henry Schein * 777,200 52,523 Hooper Holmes 1,650,000 10,197 LabOne * 246,100 7,991 Lifeline Systems *! 667,200 12,677 LifePoint Hospitals * 125,000 3,681 Mid Atlantic Medical Services * 700,000 45,360 Renal Care Group * 303,650 12,510 Sunrise Senior Living * 650,900 25,216 WellChoice * 425,000 14,663 187,665 Pharmaceuticals 0.9% Atherogenics * 625,000 9,344 Eon Labs * 200,000 10,190 Medicines Company * 350,000 10,311 Noven Pharmaceuticals * 1,056,300 16,066 45,911 Total Health Care 532,213 INDUSTRIALS & BUSINESS SERVICES 16.8% Aerospace & Defense 1.2% Armor Holdings *! 1,502,300 39,526 Mercury Computer Systems * 805,000 20,044 59,570 Air Freight & Logistics 2.1% EGL * 975,000 17,121 Expeditors International of Washington 108,600 4,090 Forward Air * 669,005 18,398 Pacer International * 830,000 16,782 Ryder System 720,000 24,588 UTi Worldwide 787,600 29,874 110,853 Airlines 0.3% Frontier Airlines * 710,000 10,125 Midwest Express Holdings * 555,600 2,339 12,464 Building Products 0.2% Trex * 300,000 11,394 11,394 Commercial Services & Supplies 6.1% Central Parking 1,486,400 22,192 CompX International ! 406,700 2,603 Consolidated Graphics *! 925,000 29,212 Education Management * 163,600 5,078 Electro Rent 564,300 7,528 First Advantage, Class A * 184,300 3,592 G&K Services, Class A 799,700 29,389 Herman Miller 1,345,100 32,646 Ionics *! 1,150,000 36,627 KForce.com * 1,311,200 12,247 Layne Christensen * 343,700 4,038 LECG * 130,900 2,996 New England Business Services ! 911,000 26,875 Resources Connection * 1,092,500 29,836 SOURCECORP * 625,900 16,042 Spherion * 139,300 1,364 Tetra Tech * 1,589,262 39,509 United Stationers * 88,400 3,617 Waterlink * 445,400 8 West Corporation * 371,908 8,639 314,038 Construction & Engineering 0.2% Insituform Technologies, Class A * 698,100 11,519 11,519 Electrical Equipment 2.5% A.O. Smith 1,670,700 58,558 American Superconductor * 219,000 3,035 Artesyn Technologies * 1,200,000 10,224 Belden ! 1,915,000 40,387 LSI Industries 814,250 10,992 PECO II * 260,200 292 Woodward Governor 89,700 5,098 128,586 Machinery 3.2% Actuant, Class A * 918,260 33,241 Cuno * 115,000 5,178 Graco 680,000 27,268 Harsco 1,159,600 50,814 IDEX 246,300 10,244 Joy Global 90,000 2,353 Lindsay Manufacturing ! 1,062,200 26,821 Reliance Steel & Aluminum 323,100 10,730 166,649 Marine 0.0% International Shipholding * 135,062 1,992 1,992 Road & Rail 1.0% Heartland Express 233,391 5,646 Knight Transportation * 1,405,000 36,038 Overnite * 398,100 9,057 50,741 Total Industrials & Business Services 867,806 INFORMATION TECHNOLOGY 20.9% Communications Equipment 1.2% Black Box 800,000 36,856 Emulex * 325,000 8,671 Packeteer * 477,500 8,108 Riverstone Networks * 1,750,000 1,942 Stratos International * 42,143 286 Tekelec * 416,700 6,480 62,343 Computer & Peripherals 0.2% Synaptics * 650,000 9,737 9,737 Electronic Equipment & Instruments 3.3% KEMET * 1,845,000 25,258 Littelfuse * 1,070,600 30,855 Methode Electronics, Class A 1,254,700 15,345 Newport * 789,600 13,052 Paxar *! 1,963,800 26,315 Plexus * 1,898,600 32,599 Technitrol * 604,500 12,537 Woodhead Industries ! 912,600 15,423 171,384 Internet Software & Services 1.0% Internet Security Systems * 937,600 17,655 MatrixOne * 1,603,700 9,879 Netegrity * 875,000 9,021 Sonicwall * 340,200 2,654 Webex Communications * 125,000 2,512 Websense * 433,800 12,684 54,405 IT Services 4.2% BISYS Group * 1,094,000 16,279 CACl International, Class A * 780,800 37,962 Global Payments 795,000 37,460 Iron Mountain * 1,461,825 57,801 Maximus * 1,058,300 41,411 MPS Group * 2,646,800 24,748 215,661 Semiconductor & Semiconductor Equipment 4.6% AMIS Holdings * 580,000 10,602 ATMI * 1,050,000 24,297 Cabot Microelectronics * 544,000 26,656 Entegris * 1,441,200 18,520 Exar * 1,163,000 19,864 Lattice Semiconductor * 168,800 1,634 Microsemi * 375,000 9,218 MKS Instruments * 1,659,700 48,131 Mykrolis * 1,554,800 25,001 Semtech * 1,714,000 38,959 Sigmatel * 115,000 2,838 Tessera Technologies * 575,000 10,816 236,536 Software 6.4% Actuate * 545,500 1,697 Autodesk 750,000 18,435 Catapult Communications * 418,600 6,070 Concord Communications * 498,000 9,945 FactSet Research Systems 856,200 32,715 FileNet * 1,225,000 33,173 Jack Henry & Associates 2,220,100 45,690 Kronos *! 1,575,000 62,386 Magma Design Automation * 506,400 11,819 Mercury Interactive * 279,300 13,585 NetIQ * 896,400 11,877 Progress Software * 900,000 18,414 Quest Software * 459,400 6,523 Red Hat * 856,700 16,080 RSA Security * 625,000 8,875 SPSS * 536,400 9,591 Verisity Ltd. * 340,000 4,335 Verity * 775,000 12,935 Wind River Systems * 1,010,900 8,856 333,001 Total Information Technology 1,083,067 MATERIALS 6.2% Chemicals 4.5% Airgas 2,447,800 52,579 Arch Chemicals ! 1,198,100 30,743 Ferro 1,080,000 29,387 IMC Global 2,325,000 23,087 MacDermid 175,000 5,992 Material Sciences * 691,100 6,987 Minerals Technologies 948,000 56,169 Scotts, Class A * 290,000 17,156 Symyx Technologies * 450,000 9,248 231,348 Containers & Packaging 0.1% Constar International * 275,000 1,482 Smurfit-Stone Container * 191,100 3,549 5,031 Metals & Mining 1.2% Adrian Steel @! 13,000 4,056 Coal Creek @ 9,295 1,757 Gibraltar Steel 228,500 5,747 Lihir Gold (AUD) 7,971,900 8,703 Meridian Gold * 1,600,000 23,376 NN, Inc 204,200 2,571 Steel Dynamics * 800,000 18,792 65,002 Paper & Forest Products 0.4% Buckeye Technologies * 1,780,100 17,890 Potlatch 100,500 3,494 21,384 Total Materials 322,765 TELECOMMUNICATION SERVICES 0.9% Diversified Telecommunication Services 0.3% Commonwealth Telephone Enterprises * 418,400 15,795 15,795 Wireless Telecommunication Services 0.6% Spectrasite * 745,000 25,889 Western Wireless, Class A * 340,000 6,242 32,131 Total Telecommunication Services 47,926 UTILITIES 0.6% Electric Utilities 0.6% Cleco 767,200 13,794 El Paso Electric * 726,200 9,695 Unisource Energy 344,500 8,495 Total Utilities 31,984 Total Common Stocks (Cost $3,839,367) 4,766,997 TRUSTS & MUTUAL FUNDS 0.6% Trusts & Mutual Funds 0.6% Ishares Russell 2000 300,000 33,240 Total Trusts & Mutual Funds (Cost $30,479) 33,240 SHORT-TERM INVESTMENTS 8.9% U.S. Treasury Obligations 0.1% U.S. Treasury Bills 0.985%, 4/15/04 ++ 750,000 748 1.00%, 4/15/04 ++ 1,200,000 1,197 1.015%, 4/15/04 ++ 200,000 199 2,144 Money Market Funds 8.8% T. Rowe Price Reserve Investment Fund, 1.13% #! 457,071,723 457,072 457,072 Total Short-Term Investments (Cost $459,216) 459,216 Total Investments in Securities 101.5% of Net Assets (Cost $4,329,062) $5,259,453 ---------- Futures Contracts - -------------------------------------------------------------------------------- ($ 000s) Contract Unrealized Expiration Value Gain (Loss) ---------- -------- ----------- Long, 145 Russell 2000 contracts, $2,140 par of U.S. Treasury Bills pledged as initial margin 3/04 $ 40,397 $ 895 Net payments (receipts) of variation margin to date (1,388) Variation margin receivable (payable) on open futures contracts $ (493) (ss.) Denominated in U.S. dollar unless otherwise noted # Seven-day yield * Non-income producing ++ All or a portion of this security is pledged to cover margin requirements on futures contracts at December 31, 2003. ! Affiliated company--See Note 2. !! Security contains restrictions as to public resale pursuant to the Securities Act of 1933 and related rules--total of such securities at period-end amounts to $53,000 and represents 0.0% of net assets @ Security valued by the Fund's Board of Directors AUD Australian dollar REIT Real Estate Investment Trust The accompanying notes are an integral part of these financial statements. T. Rowe Price Small-Cap Stock Fund - -------------------------------------------------------------------------------- Certified Annual Report Statement of Assets and Liabilities - -------------------------------------------------------------------------------- ($ 000s) Assets Investments in securities, at value Affiliated companies (cost $824,364) $ 877,163 Other companies (cost $3,504,698) 4,382,290 Total investments in securities 5,259,453 Other assets 75,840 Total assets 5,335,293 Liabilities Total liabilities 152,051 NET ASSETS $ 5,183,242 ------------- Net Assets Consist of: Undistributed net realized gain (loss) $ 76,743 Net unrealized gain (loss) 931,286 Paid-in-capital applicable to 185,277,692 shares of $0.50 par value capital stock outstanding; 200,000,000 shares authorized 4,175,213 NET ASSETS $ 5,183,242 ------------- NET ASSET VALUE PER SHARE Small-Cap Stock class ($4,864,145,957/173,831,033 shares outstanding) $ 27.98 ------------- Small-Cap Stock-Advisor Class ($319,096,184/11,446,659 shares outstanding) $ 27.88 ------------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Small-Cap Stock Fund - -------------------------------------------------------------------------------- Certified Annual Report Statement of Operations - -------------------------------------------------------------------------------- ($ 000s) Year Ended 12/31/03 Investment Income (Loss) Income Dividend $ 35,376 Interest 4 Total income 35,380 Expenses Investment management 31,577 Shareholder servicing Small-Cap Stock class 6,558 Advisor Class 287 Distribution and service (12b-1) - Advisor Class 514 Prospectus and shareholder reports Small-Cap Stock class 401 Advisor Class 51 Custody and accounting 238 Registration 174 Legal and audit 28 Directors 21 Miscellaneous 30 Total expenses 39,879 Expenses paid indirectly (7) Net expenses 39,872 Net investment income (loss) (4,492) Realized and Unrealized Gain (Loss) Net realized gain (loss) Securities 157,502 Futures 1,540 Foreign currency transactions (3) Net realized gain (loss) 159,039 Change in net unrealized gain (loss) Securities 1,057,614 Futures 895 Change in net unrealized gain (loss) 1,058,509 Net realized and unrealized gain (loss) 1,217,548 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 1,213,056 ----------- The accompanying notes are an integral part of these financial statements. T. Rowe Price Small-Cap Stock Fund - -------------------------------------------------------------------------------- Certified Annual Report Statement of Changes in Net Assets - -------------------------------------------------------------------------------- ($ 000s) Year Ended 12/31/03 12/31/02 Increase (Decrease) in Net Assets Operations Net investment income (loss) $ (4,492) $ 1,380 Net realized gain (loss) 159,039 53,832 Change in net unrealized gain (loss) 1,058,509 (629,247) Increase (decrease) in net assets from operations 1,213,056 (574,035) Distributions to shareholders Net investment income Small-Cap Stock class - (1,509) Net realized gain Small-Cap Stock class (79,833) (34,853) Advisor Class (4,666) (1,476) Decrease in net assets from distributions (84,499) (37,838) Capital share transactions * Shares sold Small-Cap Stock class 1,456,686 1,667,944 Advisor Class 160,137 155,003 Distributions reinvested Small-Cap Stock class 75,918 34,611 Advisor Class 4,529 1,379 Shares redeemed Small-Cap Stock class (1,037,784) (964,861) Advisor Class (44,286) (39,553) Increase (decrease) in net assets from capital share transactions 615,200 854,523 Net Assets Increase (decrease) during period 1,743,757 242,650 Beginning of period 3,439,485 3,196,835 End of period $ 5,183,242 $ 3,439,485 ------------ ----------- Statement of Changes in Net Assets - -------------------------------------------------------------------------------- ($ 000s) Year Ended 12/31/03 12/31/02 *Share information Shares sold Small-Cap Stock class 60,161 69,031 Advisor Class 6,571 6,686 Distributions reinvested Small-Cap Stock class 2,799 1,612 Advisor Class 168 64 Shares redeemed Small-Cap Stock class (42,561) (41,840) Advisor Class (1,869) (1,699) Increase (decrease) in shares outstanding 25,269 33,854 The accompanying notes are an integral part of these financial statements. T. Rowe Price Small-Cap Stock Fund - -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 Notes to Financial Statements - -------------------------------------------------------------------------------- NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES T. Rowe Price Small-Cap Stock Fund, Inc. (the fund) is registered under the Investment Company Act of 1940 (the 1940 Act) as a diversified, open-end management investment company. The fund seeks to provide long-term capital growth by investing primarily in stocks of small companies. The fund has two classes of shares: Small-Cap Stock Fund (Small-Cap Stock class), offered since June 1, 1956, and Small-Cap Stock Fund-Advisor Class (Advisor Class), offered since March 31, 2000. Advisor Class shares are sold only through brokers and other financial intermediaries that are compensated by the class for distribution and certain administrative services under a Board-approved Rule 12b-1 plan. Each class has exclusive voting rights on matters related solely to that class, separate voting rights on matters that relate to both classes, and, in all other respects, the same rights and obligations as the other class. The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates made by fund management. Valuation The fund values its investments and computes its net asset value per share at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day that the NYSE is open for business. Equity securities listed or regularly traded on a securities exchange or in the over-the-counter market are valued at the last quoted sale price, or official closing price for certain markets, at the time the valuations are made. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Listed securities not traded on a particular day are valued at the mean of the latest bid and ask prices for domestic securities and the last quoted sale price for international securities. Debt securities are generally traded in the over-the-counter market. Securities with original maturities of one year or more are valued at prices furnished by dealers who make markets in such securities or by an independent pricing service, which considers yield or price of bonds of comparable quality, coupon, maturity, and type, as well as prices quoted by dealers who make markets in such securities. Securities with original maturities of less than one year are valued at amortized cost in local currency, which approximates fair value when combined with accrued interest. Financial futures contracts are valued at closing settlement prices. Other investments and those for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by the T. Rowe Price Valuation Committee, established by the fund's Board of Directors. Most foreign markets close before the NYSE. Normally, developments that could affect the values of securities that occur between the close of a foreign market and the close of the NYSE will not be reflected in security valuations used by the fund to compute its share price. However, if developments are so significant that they will, in the judgment of the fund, clearly and materially affect security values, such valuations may be adjusted to reflect the estimated fair value of the securities as of the close of the NYSE, as determined in good faith by the T. Rowe Price Valuation Committee, established by the fund's Board of Directors. Currency Translation Assets, including investments, and liabilities denominated in foreign currencies are translated into U.S. dollar values each day at the prevailing exchange rate, using the mean of the bid and ask prices of such currencies against U.S. dollars as quoted by a major bank. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on realized and unrealized security gains and losses is reflected as a component of security gains and losses. Class Accounting The Advisor Class pays distribution and administrative expenses in the form of Rule 12b-1 fees, in an amount not exceeding 0.25% of the class's average daily net assets. Shareholder servicing, prospectus, and shareholder report expenses incurred by each class are charged directly to the class to which they relate. Expenses common to both classes, investment income, and realized and unrealized gains and losses are allocated to the classes based upon the relative daily net assets of each class. Income distributions are declared and paid by each class on an annual basis. Capital gain distributions, if any, are declared and paid by the fund, typically on an annual basis. Rebates and Credits Subject to best execution, the fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the fund in cash. Commission rebates are included in realized gain on securities in the accompanying financial statements and totaled $152,000 for the year ended December 31, 2003. Additionally, the fund earns credits on temporarily uninvested cash balances at the custodian that reduce the fund's custody charges. Custody expense in the accompanying financial statements is presented before reduction for credits, which are reflected as expenses paid indirectly. Investment Transactions, Investment Income, and Distributions Income and expenses are recorded on the accrual basis. Premiums and discounts on debt securities are amortized for financial reporting purposes. Dividends received from mutual fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex-dividend date. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Payments ("variation margin") made or received to settle the daily fluctuations in the value of futures contracts are recorded as unrealized gains or losses until the contracts are closed. Unrealized gains and losses on futures contracts are included in other assets and other liabilities, respectively, and in the change in net unrealized gain or loss in the accompanying financial statements. Distributions to shareholders are recorded on the ex-dividend date. Income distributions are declared and paid on an annual basis. Capital gain distributions, if any, are typically declared and paid on an annual basis. Other In the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is dependent on claims that may be made against the fund in the future and, therefore, cannot be estimated; however, based on experience, the risk of material loss from such claims is considered remote. NOTE 2 - INVESTMENT TRANSACTIONS Consistent with its investment objective, the fund engages in the following practices to manage exposure to certain risks or enhance performance. The investment objective, policies, program, and risk factors of the fund are described more fully in the fund's prospectus and Statement of Additional Information. Futures Contracts During the year ended December 31, 2003, the fund was a party to futures contracts, which provide for the future sale by one party and purchase by another of a specified amount of a specific financial instrument at an agreed upon price, date, time, and place. Risks arise from possible illiquidity of the futures market and from movements in security values. Affiliated Companies The fund may invest in certain securities that are considered affiliated companies. As defined by the 1940 Act, an affiliated company is one in which the fund owns 5% or more of the outstanding voting securities. At December 31, 2003, the value of affiliated companies totaled $877,163,000, representing 16.9% of the value of the fund's investments in securities. For the year then ended, $10,500,000 (29.7%) of dividend income, and $27,026,000 (2.6%) of net realized gain reflected in the accompanying financial statements resulted from the fund's transactions with affiliated companies. Other Purchases and sales of portfolio securities, other than short-term securities, aggregated $1,075,520,000 and $610,072,000, respectively, for the year ended December 31, 2003. NOTE 3 - FEDERAL INCOME TAXES No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Federal income tax regulations differ from generally accepted accounting principles; therefore, distributions determined in accordance with tax regulations may differ significantly in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. Distributions during the year ended December 31, 2003 were characterized as follows for tax purposes: - -------------------------------------------------------------------------------- Ordinary income $ 6,942,000 Long-term capital gain 77,557,000 Total distributions $ 84,499,000 -------------- At December 31, 2003, the tax-basis components of net assets were as follows: - -------------------------------------------------------------------------------- Unrealized appreciation $ 1,200,449,000 Unrealized depreciation (270,058,000) Net unrealized appreciation (depreciation) 930,391,000 Undistributed ordinary income 4,924,000 Undistributed long-term capital gain 72,714,000 Paid-in capital 4,175,213,000 Net assets $ 5,183,242,000 ----------------- For the year ended December 31, 2003, the fund recorded the following permanent reclassifications to reflect tax character. Reclassifications to paid-in capital relate primarily to a tax practice that treats a portion of the proceeds from each redemption of capital shares as a distribution of taxable net investment income and/or realized capital gain. Results of operations and net assets were not affected by these reclassifications. - -------------------------------------------------------------------------------- Undistributed net investment income $ 4,492,000 Undistributed net realized gain (8,822,000) Paid-in capital 4,330,000 At December 31, 2003, the cost of investments for federal income tax purposes was $4,329,957,000. NOTE 4 - RELATED PARTY TRANSACTIONS The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. The investment management agreement between the fund and the manager provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.45% of the fund's average daily net assets, and the fund's pro-rata share of a group fee. The group fee is calculated based on the combined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee schedule, with rates ranging from 0.48% for the first $1 billion of assets to 0.295% for assets in excess of $120 billion. The fund's portion of the group fee is determined by the ratio of its average daily net assets to those of the group. At December 31, 2003, the effective annual group fee rate was 0.32%, and investment management fee payable totaled $3,351,000. The Advisor Class is also subject to a contractual expense limitation through December 31, 2003. During the limitation period, the manager is required to waive its management fee and reimburse the class for any expenses, excluding interest, taxes, brokerage commissions, and extraordinary expenses, that would otherwise cause the class's ratio of total expenses to average net assets (expense ratio) to exceed its expense limitation of 1.20%. Through December 31, 2005, the class is required to repay the manager for expenses previously reimbursed and management fees waived to the extent its net assets have grown or expenses have declined sufficiently to allow repayment without causing the class's expense ratio to exceed its expense limitation. For the year ended December 31, 2003, the Advisor Class operated below its expense limitation. In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates computes the daily share prices and maintains the financial records of the fund. T. Rowe Price Services, Inc., provides shareholder and administrative services in its capacity as the fund's transfer and dividend disbursing agent. T. Rowe Price Retirement Plan Services, Inc., provides subaccounting and recordkeeping services for certain retirement accounts invested in the Small-Cap Stock class and R Class. Expenses incurred pursuant to these service agreements totaled $4,237,000 for the year ended December 31, 2003, of which $382,000 was payable at period-end. Additionally, the fund is one of several mutual funds in which certain college savings plans managed by Price Associates may invest. As approved by the fund's Board of Directors, shareholder servicing costs associated with each college savings plan are borne by the fund in proportion to the average daily value of its shares owned by the college savings plan. For the year ended December 31, 2003, the fund was charged $167,000 for shareholder servicing costs related to the college savings plans, of which $127,000 was for services provided by Price and $20,000 was payable at period-end. At December 31, 2003, approximately 1.0% of the outstanding shares of the Small-Cap Stock class were held by college savings plans. The fund is also one of several mutual funds sponsored by Price Associates (underlying Price funds) in which the T. Rowe Price Retirement Funds (Retirement Funds) may invest. The Retirement Funds do not invest in the underlying Price funds for the purpose of exercising management or control. Pursuant to a special servicing agreement, expenses associated with the operation of the Retirement Funds are borne by each underlying Price fund to the extent of estimated savings to it and in proportion to the average daily value of its shares owned by the Retirement Funds. Expenses allocated under this agreement are reflected as shareholder servicing expense in the accompanying financial statements. For the year ended December 31, 2003, the fund was allocated $103,000 of Retirement Funds' expenses, of which $51,000 related to services provided by Price and $17,000 was payable at period-end. At December 31, 2003, approximately 0.8% of the outstanding shares of the Small-Cap Stock class were held by the Retirement Funds. The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe Price Government Reserve Investment Fund (collectively, the Reserve Funds), open-end management investment companies managed by Price Associates. The Reserve Funds are offered as cash management options only to mutual funds, trusts, and other accounts managed by Price Associates and/or its affiliates, and are not available to the public. The Reserve Funds pay no investment management fees. During the year ended December 31, 2003, dividend income from the Reserve Funds totaled $4,503,000. T. Rowe Price Small-Cap Stock Fund - -------------------------------------------------------------------------------- Certified Annual Report Report of Independent Auditors - -------------------------------------------------------------------------------- To the Board of Directors and Shareholders of T. Rowe Price Small-Cap Stock 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 Stock Fund, Inc. (the "Fund") at December 31, 2003, and the results of its operations, the changes in its net assets and the financial highlights for each of the fiscal periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with custodians and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Baltimore, Maryland January 26, 2004 T. Rowe Price Small-Cap Stock Fund - -------------------------------------------------------------------------------- Certified Annual Report Tax Information (Unaudited) for the Tax Year Ended 12/31/03 We are providing this information as required by the Internal Revenue Code. The amounts shown may differ from those elsewhere in this report because of differences between tax and financial reporting requirements. The fund's distributions to shareholders included: o $7,274,000 from short-term capital gains, o $81,556,000 from long-term capital gains, of which $68,386,000 was subject to the 15% rate gains category, and $13,170,000 to the 20% rate gains category. For taxable non-corporate shareholders, $11,910,000 of the fund's income and short-term capital gains represents qualified dividend income subject to the 15% rate category. For corporate shareholders, $11,910,000 of the fund's income and short-term capital gains qualified for the dividends-received deduction. Information on Proxy Voting - -------------------------------------------------------------------------------- A description of the policies and procedures that the T. Rowe Price Small-Cap Stock Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge, upon request by calling 1-800-225-5132. It also appears in the fund's Statement of Additional Information (Form 485B), which can be found on the SEC's Web site, www.sec.gov. T. Rowe Price Small-Cap Stock Fund - -------------------------------------------------------------------------------- Certified Annual Report About the Fund's Directors and Officers - -------------------------------------------------------------------------------- Your fund is governed by a Board of Directors that meets regularly to review investments, performance, expenses, and other business matters, and is responsible for protecting the interests of shareholders. The majority of the fund's directors are independent of T. Rowe Price Associates, Inc. (T. Rowe Price); "inside" directors are officers of T. Rowe Price. The Board of Directors elects the fund's officers, who are listed in the final table. The business address of each director and officer is 100 East Pratt Street, Baltimore, MD 21202. The Statement of Additional Information includes additional information about the fund directors and is available without charge by calling a T. Rowe Price representative at 1-800-225-5132. Independent Directors Name (Date of Birth) Principal Occupation(s) During Past 5 Years Year Elected * and Directorships of Other Public Companies Anthony W. Deering Director, Chairman of the Board, President, and (1/28/45) Chief Executive Officer, The Rouse Company, real 2001 estate developers; Director, Mercantile Bank (4/03 to present) Donald W. Dick, Jr. Principal, EuroCapital Advisors, LLC, an (1/27/43) acquisition and management advisory firm 1992 David K. Fagin Director, Golden Star Resources Ltd., Canyon (4/9/38) Resources Corp. (5/00 to present), and Pacific 1992 Rim Mining Corp. (2/02 to present); Chairman and President, Nye Corp. Karen N. Horn Managing Director and President, Global Private (9/21/43) Client Services, Marsh Inc.; Managing Director and 2003 Head of International Private Banking, Bankers Trust; Director, Eli Lilly and Company F. Pierce Linaweaver President, F. Pierce Linaweaver & Associates, (8/22/34) Inc., consulting environmental and civil engineers 2001 John G. Schreiber Owner/President, Centaur Capital Partners, Inc., a (10/21/46) real estate investment company; Senior Advisor and 2001 Partner, Blackstone Real Estate Advisors, L.P.; Director, AMLI Residential Properties Trust, Host Marriott Corp., and The Rouse Company Hubert D. Vos ** Owner/President, Stonington Capital Corp., (8/2/33) a private investment company 1992 Paul M. Wythes ** Founding Partner, Sutter Hill Ventures, a (6/23/33) venture capital limited partnership, providing 1992 equity capital to young high-technology companies throughout the United States; Director, Teltone Corp. * Each independent director oversees 107 T. Rowe Price portfolios and serves until retirement, resignation, or election of a successor. ** Retired from Board of Directors effective December 31, 2003. Inside Directors Name (Date of Birth) Year Elected * [Number of T. Rowe Price Principal Occupation(s) During Past 5 Years Portfolios Overseen] and Directorships of Other Public Companies John H. Laporte, CFA Director and Vice President, T. Rowe Price (7/26/45) Group, Inc.; Vice President, T. Rowe Price 1994 [15] James S. Riepe Director and Vice President, T. Rowe Price; Vice (6/25/43) Chairman of the Board, Director, and Vice 1992 President, T. Rowe Price Group, Inc.; [107] Chairman of the Board and Director, T. Rowe Price Global Asset Management Limited, T. Rowe Price Global Investment Services Limited, T. Rowe Price Investment Services, Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of the Board, Director, President, and Trust Officer, T. Rowe Price Trust Company; Director, T. Rowe Price International, Inc.; Chairman of the Board, Small-Cap Stock Fund M. David Testa, CFA, CIC Chief Investment Officer, Director, and Vice (4/22/44) President, T. Rowe Price; Vice Chairman of the 1997 Board, Chief Investment Officer, Director, and [107] Vice President, T. Rowe Price Group, Inc.; Chairman of the Board and Director, T. Rowe Price International, Inc.; Director, T. Rowe Price Global Asset Management Limited and T. Rowe Price Global Investment Services Limited; Director and Vice President, T. Rowe Price Trust Company * Each inside director serves until retirement, resignation, or election of a successor. Officers Name (Date of Birth) Title and Fund(s) Served Principal Occupation(s) Francisco Alonso (1/27/78) Vice President, T. Rowe Price; formerly Vice President, Small-Cap Stock Fund student, University of Ohio (to 2000); intern, Morgan Stanley Dean Witter (to 2000) Preston G. Athey, CFA, CIC (7/17/49) Vice President, T. Rowe Price, T. Rowe Vice President, Small-Cap Stock Fund Price Group, Inc., and T. Rowe Price Trust Company Stephen V. Booth (6/21/61) Vice President, T. Rowe Price, T. Rowe Vice President, Small-Cap Stock Fund Price Group, Inc., and T. Rowe Price Trust Company Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least five years. Officers (continued) Name (Date of Birth) Title and Fund(s) Served Principal Occupation(s) Brace C. Brooks, CFA (1/10/67) Vice President, T. Rowe Price Vice President, Small-Cap Stock Fund and T. Rowe Price Group, Inc. Joseph A. Carrier (12/30/60) Vice President, T. Rowe Price, Treasurer, Small-Cap Stock Fund T. Rowe Price Group, Inc., and T. Rowe Price Investment Services, Inc. Hugh M. Evans III, CFA (5/17/66) Vice President, T. Rowe Price Vice President, Small-Cap Stock Fund and T. Rowe Price Group, Inc. Roger L. Fiery III, CPA (2/10/59) Vice President, T. Rowe Price, T. Rowe Vice President, Small-Cap Stock Fund Price Group, Inc., T. Rowe Price International, Inc., and T. Rowe Price Trust Company Henry H. Hopkins (12/23/42) Director and Vice President, T. Rowe Vice President, Small-Cap Stock Fund Price Group, Inc., T. Rowe Price Investment Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price Trust Company; Vice President, T. Rowe Price, T. Rowe Price International, Inc., and T. Rowe Price Retirement Plan Services, Inc. Kris H. Jenner, MD, D. Phil. (2/5/62) Vice President, T. Rowe Price Vice President, Small-Cap Stock Fund and T. Rowe Price Group, Inc. Patricia B. Lippert (1/12/53) Assistant Vice President, T. Rowe Secretary, Small-Cap Stock Fund Price and T. Rowe Price Investment Services, Inc. Robert J. Marcotte (3/6/62) Vice President, T. Rowe Price Vice President, Small-Cap Stock Fund and T. Rowe Price Group, Inc. Gregory A. McCrickard, CFA (10/19/58) Vice President, T. Rowe Price, T. Rowe President, Small-Cap Stock Fund Price Group, Inc., and T. Rowe Price Trust Company Joseph M. Milano, CFA (9/14/72) Vice President, T. Rowe Price and Vice President, Small-Cap Stock Fund T. Rowe Price Group, Inc. Curt J. Organt (1/5/68) Vice President, T. Rowe Price Vice President, Small-Cap Stock Fund Charles G. Pepin (4/23/66) Vice President, T. Rowe Price and Vice President, Small-Cap Stock Fund T. Rowe Price Group, Inc. Michael F. Sola, CFA (7/21/69) Vice President, T. Rowe Price and Vice President, Small-Cap Stock Fund T. Rowe Price Group, Inc. Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least five years. Officers (continued) Name (Date of Birth) Title and Fund(s) Served Principal Occupation(s) J. David Wagner, CFA (2/25/74) Vice President, T. Rowe Price and Vice President, Small-Cap Stock Fund T. Rowe Price Group, Inc.; formerly student, Darden Graduate School of Business Administration, University of Virginia (to 2000) Julie L. Waples (5/12/70) Vice President, T. Rowe Price Vice President, Small-Cap Stock Fund Wenhua Zhang, CFA, CPA (3/14/70) Vice President, T. Rowe Price; formerly Vice President, Small-Cap Stock Fund associate, Swiss Reinsurance Company (to 1999); student, The Wharton School, University of Pennsylvania (to 2001) Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least five years. Item 2. Code of Ethics. As of the end of the period covered by this report, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were approved or waivers were granted to this code of ethics during the period covered by this report. Item 3. Audit Committee Financial Expert. The registrant's Board of Directors/Trustees has determined that Mr. David K. Fagin qualifies as an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Fagin is considered independent for purposes of Item 3 of Form N-CSR. Item 4. Principal Accountant Fees and Services. (a) - (d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant's principal accountant were as follows: 2003 2002 Audit Fees $17,783 $14,766 Audit-Related Fees 1,084 -- Tax Fees 4,618 3,575 All Other Fees 124 216 Audit fees include amounts related to the audit of the registrant's annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. Audit-related fees include amounts reasonably related to the performance of the audit of the registrant's financial statements, specifically the issuance of a report on internal controls. Tax fees include amounts related to tax compliance, tax planning, and tax advice. Other fees include the registrant's pro-rata share of amounts for agreed-upon procedures in conjunction with service contract approvals by the registrant's Board of Directors/Trustees. (e)(1) The registrant's audit committee has adopted a policy whereby audit and non-audit services performed by the registrant's principal accountant for the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant require pre-approval in advance at regularly scheduled audit committee meetings. If such a service is required between regularly scheduled audit committee meetings, pre-approval may be authorized by one audit committee member with ratification at the next scheduled audit committee meeting. Waiver of pre-approval for audit or non-audit services requiring fees of a de minimis amount is not permitted. (2) No services included in (b) - (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) Not applicable. (g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant's principal accountant for non-audit services rendered to the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant were $719,000 and $671,000, respectively, and were less than the aggregate fees billed for those same periods by the registrant's principal accountant for audit services rendered to the T. Rowe Price Funds. (h) All non-audit services rendered in (g) above were pre-approved by the registrant's audit committee. Accordingly, these services were considered by the registrant's audit committee in maintaining the principal accountant's independence. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. [Reserved] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 9. Controls and Procedures. (a) The registrant's principal executive officer and principal financial officer have evaluated the registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the registrant's disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. (b) The registrant's principal executive officer and principal financial officer are aware of no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10. Exhibits. (a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is attached. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (b) A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. T. Rowe Price Small-Cap Stock Fund, Inc. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date February 13, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date February 13, 2004 By /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer Date February 13, 2004