Item 1. Report to Shareholders
T. Rowe Price Small-Cap Stock Fund
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December 31, 2003
Certified Annual Report
This report is certified under the Sarbanes-Oxley Act of 2002, which requires
that public companies, including mutual funds, affirm that the information
provided in their annual and semiannual shareholder reports fully and fairly
represents their financial position.
T. Rowe Price Small-Cap Stock Fund
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Certified Annual Report
Performance Comparison
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This chart shows the value of a hypothetical $10,000 investment in the fund over
the past 10 fiscal year periods or since inception (for funds lacking 10-year
records). The result is compared with benchmarks, which may include a
broad-based market index and a peer group average or index. Market indexes do
not include expenses, which are deducted from fund returns as well as mutual
fund averages and indexes.
[Graphic Omitted]
SMALL-CAP 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
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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
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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
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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
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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
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Certified Annual Report
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Advisor Class
Year 3/31/00
Ended Through
12/31/03 12/31/02 12/31/01 12/31/00
NET ASSET VALUE
Beginning of period $ 21.44 $ 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
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Certified Annual Report December 31, 2003
Portfolio of Investments (ss.) Shares/Par Value
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($ 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