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October 15, 1999
FUND PROFILE
T. ROWE PRICE
Tax-EfficientGrowth Fund
A fund seeking long-term capital appreciation while minimizing taxable
distributions to shareholders.
This profile summarizes key information about the fund that is included in the
fund's prospectus. The fund's prospectus includes additional information about
the fund, including a more detailed description of the risks associated with
investing in the fund that you may want to consider before you invest. You may
obtain the prospectus and other information about the fund at no cost by calling
1-800-341-0787, or by visiting our Web site at www.troweprice.com.
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What is the fund's objective?
The fund seeks attractive long-term capital appreciation on an after-tax
basis.
What is the fund's principal investment strategy?
We will invest primarily in large-capitalization stocks selected mainly from
the 1,000 largest U.S. companies.
Stock selection is based on fundamental, bottom-up analysis that seeks to
identify companies with superior long-term appreciation prospects. Generally
we use a growth approach to stock selection, looking for companies with a
demonstrated ability to increase revenues, earnings, and cash flow
consistently; capable management; attractive business niches; and a
sustainable competitive advantage. Valuation measures, such as a company's
price/earnings ratio relative to the market and its own growth rate, and its
dividend yield relative to the market are also considered.
Generally, the fund will limit exposure to high-yielding stocks. However, the
payment of dividends - even higher-than-average dividends - does not
disqualify a stock from consideration for the fund's portfolio.
To accomplish the fund's goal of minimizing taxable distributions, we will
strive to avoid realizing capital gains. However, gains may be realized when
it is believed that the risk of holding a security outweighs tax
considerations. When gains are taken, we will attempt to offset them with
losses from other securities. This may be accomplished by selling certain
securities at a loss and investing the proceeds in similar securities.
While most assets will be invested in U.S. common stocks, other securities
may also be purchased, including foreign stocks, futures, and options, in
keeping with fund objectives.
Further information about the fund's investments, including a review of
market conditions and fund strategies and their impact on performance, is
available in the annual and semiannual shareholder reports. To obtain free
copies of any of these documents, call 1-800-341-0787.
What are the main risks of investing in the fund?
As with all equity funds, this fund's share price can fall because of
weakness in the broad market, a particular industry, or specific holdings.
The market as a whole can decline for many reasons, including adverse
political or economic developments here or abroad, changes in investor
psychology, or heavy institutional selling. The prospects for an industry or
company may deteriorate because of a variety of factors, including
disappointing earnings or changes in the competitive environment. In
addition, our assessment of companies held in the fund may prove incorrect,
resulting in losses or poor performance even
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in a rising market. Finally, the fund's investment approach could fall out of
favor with the investing public, resulting in lagging performance versus
other types of stock funds.
Growth stocks can be volatile for several reasons. Since they usually
reinvest a high proportion of their earnings in their own businesses, they
may lack the dividends often associated with value stocks that could cushion
their decline in a falling market. Also, since investors buy growth stocks
because of their expected superior earnings growth, earnings disappointments
often result in sharp price declines.
Investments in stocks that appear undervalued carry the risk that the market
will not recognize a security's intrinsic value for a long time, or that a
stock judged to be undervalued may actually be appropriately priced.
There is no guarantee the fund's attempts to manage its portfolio in a
tax-efficient manner will be successful.
To the extent that the fund invests in foreign stocks, it is also subject to
the risk that some holdings may lose value because of declining foreign
currencies or adverse political or economic events overseas. If the fund uses
futures and options, it is exposed to additional volatility and potential
losses.
As with any mutual fund, there can be no guarantee the fund will achieve its
objective.
. The fund's share price may decline, so when you sell your shares, you may
lose money. An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
How can I tell if the fund is appropriate for me?
Consider your investment goals, your time horizon for achieving them, and
your tolerance for risk. If you can accept the possibility of share price
declines in an effort to achieve long-term capital appreciation, the fund
could be appropriate for you. This fund should not represent your complete
investment program or be used for short-term trading purposes.
The fund can be used in both regular and tax-deferred accounts, such as IRAs.
. Investors should have a long-term investment horizon and be willing to wait
out bear markets.
How has the fund performed in the past?
Because the fund commenced operations in 1999, there is no historical
performance information shown here. Performance history will be available
after the fund has been in operation for one calendar year.
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What fees or expenses will I pay?
The fund is 100% no load. The fund charges a 1% redemption fee, payable to
the fund, on shares held less than two years. The fee applies to exchanges as
well. There are no other fees or charges to buy or sell fund shares, reinvest
dividends, or exchange into other T. Rowe Price funds. There are no 12b-1
fees.
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Table 1 Fees and Expenses of the Fund
<CAPTION>
Shareholder fees (fees paid directly from your investment)
Redemption fee (for shares held less than two 1%
years) Annual fund operating expenses
(expenses that are deducted from fund assets)
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<S> <C>
Management fee 0.62%/a/
Other expenses 0.61%
Total annual fund operating expenses 1.23%/a/
Fee waiver/reimbursement 0.13%
Net expenses 1.10%
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</TABLE>
/a/
To limit the fund's expenses during its initial period of operations, T. Rowe
Price contractually obligated itself to waive fees and bear any expenses
through February 28, 2001, that would cause the ratio of expenses to average
net assets to exceed 1.10%. Fees waived or expenses paid or assumed under
this agreement are subject to reimbursement to T. Rowe Price by the fund
whenever the fund's expense ratio is below 1.10%; however, no reimbursement
will be made after February 28, 2003, or if it would result in the expense
ratio exceeding 1.10%.
Example. The following table gives you a rough idea of how expense ratios
may translate into dollars and helps you to compare the cost of investing in
this fund with that of other funds. Although your actual costs may be higher
or lower, the table shows how much you would pay if operating expenses remain
the same, the expense limitation currently in place is not renewed, you
invest $10,000, you earn a 5% annual return, and you hold the investment for
the following periods:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
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<S> <C> <C> <C>
$112 $363 $648 $1,460
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</TABLE>
Who manages the fund?
The fund is managed by T. Rowe Price Associates, Inc. Founded in 1937, T.
Rowe Price and its affiliates manage investments for individual and
institutional accounts. The company offers a comprehensive array of stock,
bond, and money market funds directly to the investing public.
Donald J. Peters manages the fund day-to-day and was appointed chairman of
its Investment Advisory Committee at its inception in 1999. He has been
managing investments since joining T. Rowe Price in 1993.
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Note: The following questions and answers about buying and selling shares and
services do not apply to employer-sponsored retirement plans. If you are a
participant in one of these plans, please call your plan's toll-free number for
additional information.
How can I purchase shares?
Fill out the New Account Form and return it with your check in the postpaid
envelope. The minimum initial purchase is $2,500 ($1,000 for IRAs and gifts
or transfers to minors). The minimum subsequent investment is $100 ($50 for
IRAs, gifts or transfers to minors, or Automatic Asset Builder). You can also
open an account by bank wire, by exchanging from another T. Rowe Price fund,
or by transferring assets from another financial institution.
How can I sell shares?
You may redeem or sell any portion of your account on any business day.
Simply write to us or call. You can also access your account at any time via
Tele*Access /(R)/ or our Web site. We offer convenient exchange among our
entire family of domestic and international funds. Restrictions may apply in
special circumstances, and some redemption requests need a signature
guarantee. A $5 fee is charged for wire redemptions under $5,000.
When will I receive income and capital gain distributions?
The fund distributes income and net capital gains, if any, at year-end. For
regular accounts, income and short-term gains are taxable at ordinary income
rates, and long-term gains are taxable at the capital gains rate.
Distributions are reinvested automatically in additional shares unless you
choose another option, such as receiving a check. Distributions paid to IRAs
and employer-sponsored retirement plans are automatically reinvested.
What services are available?
A wide range, including but not limited to:
. retirement plans for individuals and large and small businesses;
. automated information and transaction services by telephone or computer;
. electronic transfers between fund and bank accounts;
. automatic investing and automatic exchange;
. brokerage services; and
. asset manager accounts.
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To open an account
Investor Services
1-800-341-0787
For fund information
and account transactions
on the Internet
www.troweprice.com
(LOGO)
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202
RPS F128-035
T. Rowe Price Investment Services, Inc., Distributor
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