<PAGE>
- --------------------------------------------------------------------------------
Fellow Shareholders
- --------------------------------------------------------------------------------
Financial markets negotiated difficult terrain in 1994. Strong economic
growth and fears of accelerating inflation ended the long bull market in
bonds. Stock prices changed little because the negative impact of rising
interest rates neutralized the positive effects of strong corporate profits.
Against this backdrop, we are pleased to report that the New Horizons Fund
eked out a gain for both the quarter and the year, outperforming the
unmanaged small-company market index and the small-company mutual fund
average.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 12/31/94
3 Months 12 Months
----------------------
<S> <C> <C>
New Horizons Fund 0.5% 0.3%
Lipper Small Company
Fund Index -0.1 -0.7
Nasdaq Composite* -1.6 -3.2
S&P 500 0.0 1.3
</TABLE>
- --------------------------------------------------------------------------------
*Principal only
Small-company stocks trailed their larger brethren in 1994 after leading
the market for the three previous years. This year's modest underperformance
does not change our belief that small stocks will lead the way for several
more years. Although corrections typically occur along the way, small stocks
have historically delivered five- to seven-year cycles of outperformance.
YEAR-END DISTRIBUTIONS
The Fund's Board of Directors declared a short-term capital gain of $0.07 per
share and a long-term capital gain of $1.36 per share, payable on December 29
to shareholders of record on December 27. In early January, we mailed your
check or statement reflecting these distributions, and Form 1099-DIV,
reporting these payments for tax purposes, was sent to you in late January.
MARKET ENVIRONMENT
Stock prices, which track a company's profit growth over the long term, had
too much of a good thing in 1994. Accelerated economic activity and
exceptional earnings growth, ironically, were the seeds of a market
correction instead of a further advance. Strong economic growth spurred the
Federal Reserve to raise the federal funds rate six times during the year to
prevent accelerating inflation. Long-term interest rates rose markedly,
ending a 12-year bond bull market, and most fixed-income investors suffered
through one of the worst years on record.
Equity investors initially ignored the upturn in interest rates, but
then began to sell late in the first quarter through midyear. They feared
alternately that the Fed's action would halt the economy's growth or that
inflation might increase. Higher interest rates, which diminish the present
value of future earnings, caused P/E ratios to decline.
The first-half correction hit small-company stocks particularly hard.
Market leadership remained with larger consumer cyclicals and industrials
whose earnings exceeded expectations. Growth stocks also underperformed as
declining P/E ratios hurt growth issues more than the broader market. A
strong rebound among technology stocks in the second half, fueled by
explosive growth in personal computer shipments and strong demand for
wireless communication products, made this sector the market's best performer
for the year. Consumer-oriented companies fared poorly, as spending, except
on big-ticket electronics and personal computer items, generally was less
than expected.
PORTFOLIO REVIEW
We made significant changes to portfolio structure during 1994, as
highlighted in the table on the next page. We weighted the portfolio to
benefit from the strong recovery in business
<PAGE>
capital spending and moved away from consumer-oriented and financial
companies. We also increased technology and business service positions.
- --------------------------------------------------------------------------------
Sector Diversification
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
12/31/93 12/31/94
-------- --------
<S> <C> <C>
Financial 7% 5%
Health Care 16 15
Consumer 28 22
Technology 20 23
Business Services 21 25
Energy 3 4
Basic Industrial 3 4
Reserves 2 2
---- ----
Total 100% 100%
</TABLE>
- --------------------------------------------------------------------------------
Eight of the top 10 contributors to fourth quarter and full-year
performance were technology issues. Computer software producer AUTODESK led
the way for both the three and 12 months, followed closely by semiconductor
manufacturers XILINX and MAXIM INTEGRATED PRODUCTS. In the networking area,
the share price of STRATACOM more than doubled since our purchase in July,
and PAYCHEX and CONCORD EFS also performed strongly in the computer service
area.
Disappointing earnings brought down consumer-oriented BROOKSTONE and
PHILLIPS-VAN HEUSEN during the quarter. FOUNDATION HEALTH and UNITED HEALTHCARE,
our two largest health care holdings, declined for the three months on fears of
price competition in the HMO industry. The poorest full-year performer was SCORE
BOARD, a sports card and memorabilia company that fell prey to a downturn in its
core markets. Gaming companies such as AUTOTOTE, PRESIDENT RIVERBOAT CASINOS,
and HOLLYWOOD PARK also lagged as a result of increased competition and delayed
licensing approval in new jurisdictions.
OUTLOOK
We view the 1995 stock market landscape cautiously. A great deal of economic
momentum carried over from 1994, but the economy, on its own or through Fed
tightening, should slow as the year progresses. Inflation seems under
control, but pressures are building in certain regional labor markets and in
some commodity areas. Despite the sharp increases in 1994, interest rates are
likely to continue rising moderately this year, but continued strong
corporate earnings should lead to a modest rise in equity prices.
Small-company growth stocks, your Fund's investment focus, should do
somewhat better than last year. Earnings for the portfolio's holdings should
average about 20% to 25% this year, which would compare quite favorably with
the more moderate growth expected for overall corporate earnings. We believe
that growth stocks, relatively out of favor for the last three years, will
regain investor interest in 1995 as earnings peak for cyclical companies.
As mentioned, valuations are more favorable than a year ago, and the
small-cap sector should enjoy several more years of outperformance. The
Fund's P/E ratio, based on our analysts' 1995 earnings estimates, is 18.2,
quite reasonable given the portfolio's growth prospects. The Fund's P/E
relative to the S&P 500 is 1.37, still below the midpoint of our historical
1.0 to 2.0 range. On a final positive note, Republican control of Congress
may usher in a reduced capital gains tax, which would be particularly
favorable to small-cap investors whose returns rely more on price
appreciation than dividends.
Respectfully submitted,
/s/ John H. Laporte
John H. Laporte
President
January 20, 1995
2
<PAGE>
- --------------------------------------------------------------------------------
New Horizons Fund P/E Ratio
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
New Horizons Fund P/E Ratio Relative to the S&P 500 P/E Ratio
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
New Horizons Fund P/E Ratio (2 Graphs)
One graph shows the New Horizons Fund price/earnings ratio from March 1961
through December 31, 1994. A second graph shows the Fund's price/earnings ratio
as compared to the S&P 500 for the same time period.
- --------------------------------------------------------------------------------
Note: The Fund's P/E ratio is an average, unweighted number based on 12-month
forward earnings per share as estimated by the Fund's investment manager at
each quarter-end.
3
<PAGE>
- --------------------------------------------------------------------------------
Contributions to the Change in Net Asset Value Per Share
- --------------------------------------------------------------------------------
Three Months Ended December 31, 1994
- -------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------
TEN BEST CONTRIBUTORS
- -------------------------------------------------------
<S> <C>
Autodesk 7 c
- -------------------------------------------------------
Xilinx 5
- -------------------------------------------------------
StrataCom 5
- -------------------------------------------------------
Broderbund Software 4
- -------------------------------------------------------
DSC Communications 4
- -------------------------------------------------------
Intuit** 3
- -------------------------------------------------------
Maxim Integrated Products 3
- -------------------------------------------------------
Sybase 3
- -------------------------------------------------------
Paychex 3
- -------------------------------------------------------
Concord EFS 3
- -------------------------------------------------------
Total 40 c
- -------------------------------------------------------
<CAPTION>
- -------------------------------------------------------
TEN WORST CONTRIBUTORS
- -------------------------------------------------------
<S> <C>
Brookstone -4 c
- -------------------------------------------------------
Autotote 4
- -------------------------------------------------------
Foundation Health 3
- -------------------------------------------------------
Phillips-Van Heusen 3
- -------------------------------------------------------
ITG 3
- -------------------------------------------------------
United HealthCare 3
- -------------------------------------------------------
Lone Star Steakhouse & Saloon 2
- -------------------------------------------------------
SEI 2
- -------------------------------------------------------
Franklin Quest 2
- -------------------------------------------------------
NovaCare 2
- -------------------------------------------------------
Total -28 c
- -------------------------------------------------------
</TABLE>
* Position added
** Position eliminated
Twelve Months Ended December 31, 1994
- -------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------
TEN BEST CONTRIBUTORS
- -------------------------------------------------------
<S> <C>
Autodesk 13 c
- -------------------------------------------------------
Oracle Systems 10
- -------------------------------------------------------
Xilinx 9
- -------------------------------------------------------
Maxim Integrated Products 9
- -------------------------------------------------------
Paychex 7
- -------------------------------------------------------
Glenayre Technologies 6
- -------------------------------------------------------
Sybase 6
- -------------------------------------------------------
StrataCom* 6
- -------------------------------------------------------
Broderbund Software 6
- -------------------------------------------------------
Concord EFS 6
- -------------------------------------------------------
Total 78 c
- -------------------------------------------------------
<CAPTION>
- -------------------------------------------------------
TEN WORST CONTRIBUTORS
- -------------------------------------------------------
Score Board -12 c
- -------------------------------------------------------
Phillips-Van Heusen 10
- -------------------------------------------------------
Viacom 8
- -------------------------------------------------------
President Riverboat Casinos 7
- -------------------------------------------------------
NovaCare 7
- -------------------------------------------------------
Perrigo 6
- -------------------------------------------------------
Hollywood Park 6
- -------------------------------------------------------
Syncor International 5
- -------------------------------------------------------
BroadBand Technologies** 5
- -------------------------------------------------------
Autotote 5
- -------------------------------------------------------
Total -71 c
- -------------------------------------------------------
</TABLE>
- -------------------------------------------------------
Fiscal-Year Performance
- -------------------------------------------------------
Periods Ended December 31, 1994
<TABLE>
<CAPTION>
1 Year 5 Years* 10 Years*
------ -------- ---------
<S> <C> <C> <C>
New Horizons Fund 0.30% 13.25% 11.93%
- -------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
*Average Annual Compound Total Return
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
4
<PAGE>
- --------------------------------------------------------------------------------
Twenty-Five Largest Holdings
- --------------------------------------------------------------------------------
December 31, 1994
<TABLE>
<CAPTION>
Percent of
Company Net Assets
- --------------------------------------------- ----------
<S> <C>
CUC International 3.5%
- ----------------------------------------------------------
Viacom 3.4
- ----------------------------------------------------------
Paychex 3.2
- ----------------------------------------------------------
Autodesk 2.4
- ----------------------------------------------------------
Xilinx 2.0
- ----------------------------------------------------------
Sybase 1.9
- ----------------------------------------------------------
Maxim Integrated Products 1.7
- ----------------------------------------------------------
Oracle Systems 1.6
- ----------------------------------------------------------
Synopsys 1.6
- ----------------------------------------------------------
Foundation Health 1.6
- ----------------------------------------------------------
Office Depot 1.3
- ----------------------------------------------------------
SunGard Data Systems 1.3
- ----------------------------------------------------------
FIserv 1.2
- ----------------------------------------------------------
<CAPTION>
Percent of
Company Net Assets
- --------------------------------------------- ----------
<S> <C>
Catalina Marketing 1.1%
- ----------------------------------------------------------
ADVO 1.0
- ----------------------------------------------------------
Linear Technology 1.0
- ----------------------------------------------------------
Sbarro 1.0
- ----------------------------------------------------------
Glenayre Technologies 1.0
- ----------------------------------------------------------
United HealthCare 1.0
- ----------------------------------------------------------
Sanifill 0.9
- ----------------------------------------------------------
Vishay Intertechnology 0.9
- ----------------------------------------------------------
DSC Communications 0.9
- ----------------------------------------------------------
Viking Office Products 0.9
- ----------------------------------------------------------
First Financial Management 0.8
- ----------------------------------------------------------
Paging Network 0.8
- ----------------------------------------------------------
Total 38.0%
- ----------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Fiscal-Year Performance Comparison
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
New Horizons Fund Performance Comparison
A line graph compares the 12/31/94 value of a hypothetical $10,000 investment
made ten years earlier in the New Horizons Fund and in the Nasdaq Composite
Index. At 12/31/94, the Fund investment would have been worth $30,861 and the
Nasdaq Index investment would have been worth $30,401.
5
<PAGE>
- --------------------------------------------------------------------------------
Investment Record
T. Rowe Price New Horizons Fund
- --------------------------------------------------------------------------------
The table below shows the investment record of one share of the T. Rowe Price
New Horizons Fund, purchased at the initial offering price of $3.33, for the
period 6/3/60 through 12/31/94. Over this time stock prices in general have
risen. The results shown should not be considered a representation of the
dividend income or capital gain or loss which may be realized from an
investment made in the Fund today.
Per-Share Data
<TABLE>
<CAPTION>
Per-Share Data With Capital Gains and Income Dividends
Taken in Cash Reinvested in Additional Shares % Change
---------------------------------- --------------------------------------- ------------------
Total Return
Periods Net Capital Capital On Investment
Ended Asset Gain Income Gain Income Value of
12/31 Value Distribution/2/ Dividend Distribution Dividend Investment Fund S&P 500
------- ----- --------------- -------- ------------ -------- ---------- ------- -------
5 YEARS 5 YEARS
------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1965/3/ $4.47 $0.30 $0.02 $0.31 $0.02 $4.85 45.5% 96.5%
1970 8.12 1.64 0.20 1.93 0.23 10.85 123.8 17.8
<CAPTION>
1 YEAR 1 YEAR
------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1971 12.21 0.15 0.05 0.20 0.07 16.71 54.0 14.3
1972 14.59 0.20 0.04 0.28 0.05 20.33 21.7 19.0
1973/1/ 8.02 0.69 0.04 0.96 0.06 11.82 -41.9 -14.7
1974 4.86 0.03 0.06 0.05 0.08 7.24 -38.7 -26.5
1975 6.66 -- 0.09 -- 0.14 10.11 39.6 37.2
1976 7.32 -- 0.07 -- 0.11 11.23 11.1 23.9
1977 8.17 -- 0.07 -- 0.11 12.66 12.7 -7.1
1978 9.75 -- 0.10 -- 0.15 15.30 20.8 6.6
1979 13.01 -- 0.16 -- 0.25 20.73 35.5 18.6
1980 19.53 0.37 0.23 0.59 0.37 32.67 57.6 32.4
1981 16.06 1.68 0.32 2.81 0.54 30.11 -7.8 -5.0
1982 15.90 2.62 0.35 4.91 0.66 36.98 22.8 21.6
1983 17.90 0.76 0.20 1.76 0.47 44.21 19.5 22.6
1984 12.78 3.72 0.16 9.19 0.40 39.95 -9.6 6.2
1985 15.13 0.52 0.14 1.63 0.44 49.66 24.3 31.7
1986 12.38 2.64 0.09 8.92 0.30 49.58 -0.2 18.7
1987 9.51 1.93 0.06 7.98 0.24 46.01 -7.2 5.3
1988 10.74 0.03 0.07 0.15 0.34 52.45 14.0 16.5
1989 12.43 1.01 0.07 4.93 0.34 66.19 26.2 31.6
1990 10.61 0.53 0.09 2.83 0.48 59.82 -9.6 -3.1
1991 15.68 0.39 0.05 2.20 0.28 91.10 52.3 30.3
1992 15.53 1.76 -- 10.23 -- 100.74 10.6 7.6
1993 16.16 2.70 -- 17.51 -- 122.91 22.0 10.1
1994 14.76 1.43 -- 10.88 -- 123.28 0.3 1.3
-----------------------------------------------------------------------------------------------------------------
Total $25.10 $2.73 $90.25 $6.13
-----------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Per-share figures reflect the 3-for-1 stock split 5/1/73.
/2/ Includes short-term capital gains of $0.01 in 1969; $0.13 in 1981; $0.17 in
1982; $0.29 in 1984; $0.02 in 1986; $0.06 in 1991; $0.37 in 1993; and $0.07
in 1994 which are taxable to shareholders at ordinary income rates.
/3/ From inception 6/30/60 to 12/31/65.
6
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets (Value in thousands)
T. Rowe Price New Horizons Fund / December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
- -----------------------------------------------------------------------------
Common Stocks, Convertibles, Rights, & Warrants -- 98.0%
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
FINANCIAL -- 4.9%
- -----------------------------------------------------------------------------
Value
----------
<C> <S> <C>
INSURANCE -- 1.6%
285,000 shs. CMAC Investment......................... $ 8,229
274,156 *Mutual Assurance........................ 6,922
196,350 Mutual Risk Management.................. 5,154
1,000,000 Presidential Life....................... 5,125
25,430
FINANCIAL SERVICES -- 3.3%
150,000 ADVANTA (Class B)....................... 3,787
100,000 Alex. Brown............................. 3,038
200,000 Charles Schwab.......................... 6,975
230,000 *+Consumer Portfolio Services............. 3,105
548,100 Duff & Phelps........................... 4,727
182,700 Duff & Phelps Credit Rating............. 1,804
100,000 Foothill Group (Class A)................ 1,500
439,600 *ITG..................................... 2,748
275,000 Legg Mason.............................. 5,844
299,999 Mercury Finance......................... 3,900
366,450 Money Store............................. 6,504
136,500 North American Mortgage................. 2,013
230,000 *Oxford Resources (Class A).............. 2,703
279,900 Raymond James Financial................. 3,919
98,500 *World Acceptance........................ 2,266
54,833
TOTAL FINANCIAL 80,263
- -----------------------------------------------------------------------------
HEALTH CARE -- 14.2%
- -----------------------------------------------------------------------------
PHARMACEUTICALS -- 1.0%
108,900 A.L. Laboratories....................... 2,205
100,000 *Affymax................................. 1,725
190,000 *Argus Pharmaceuticals................... 404
175,000 *Ethical Holdings ADR.................... 1,137
50,000 *++Genta Units............................. 1,371
324,100 *+Incyte Pharmaceuticals.................. 4,497
200,000 *Inhale Therapeutic Systems.............. 1,800
175,000 *++Magainin Pharmaceuticals................ 408
250,000 *Noven Pharmaceuticals................... 3,094
16,641
BIOTECHNOLOGY -- 2.6%
151,500 shs. *Arris Pharmaceutical.................... 890
100,000 *Biogen.................................. 4,125
275,000 *Cell Genesys............................ 2,131
50,000 *CellPro................................. 488
100,000 *Cephalon................................ 800
150,000 *Chiron.................................. 11,962
181,300 *Corvas International.................... 374
150,000 *++Creative Biomolecules................... 219
215,000 *Curative Technologies................... 726
390,000 *Cytel................................... 1,121
140,000 *Energy BioSystems....................... 770
90,000 *Genzyme Transgenics..................... 180
661,538 *IBAH.................................... 1,488
200,000 *IDEXX Laboratories...................... 7,100
200,000 *Immunex................................. 2,950
375,000 *Isis Pharmaceuticals (Class B).......... 1,406
500,000 *++Isis Pharmaceuticals.................... 1,688
200,000 *Matritech............................... 338
20,000 *Molecular Dynamics...................... 125
200,000 *NeXagen................................. 1,125
50,000 *Regeneron Pharmaceuticals............... 150
99,000 *Repligen................................ 167
185,000 *SangStat Medical........................ 856
200,000 *++T Cell Sciences......................... 428
122,000 *Vertex Pharmaceuticals.................. 1,799
45,000 *Vical.................................. 349
43,755
MEDICAL EQUIPMENT -- 0.4%
200,000 *Fresenius USA........................... 1,675
135,800 *Nellcor................................. 4,413
15,000 *VISX.................................... 154
6,242
MEDICAL INSTRUMENTS & DEVICES -- 2.6%
75,000 Arrow International..................... 2,531
97,900 Collagen................................ 2,178
103,600 *Cyberonics.............................. 363
200,000 *Enzymatics.............................. 63
593,000 *Haemonetics............................. 10,229
100,000 *Heart Technology........................ 1,950
107,000 *IGEN.................................... 562
150,000 Minntech................................ 2,288
150,000 *Pyxis................................... 2,850
172,000 Stryker................................. 6,299
147,100 *Sullivan Dental Products................ 1,912
320,000 *Sybron International.................... 11,040
42,265
</TABLE>
7
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price New Horizons Fund / Statement of Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<C> <S> <C>
HEALTH CARE SERVICES -- 7.6%
100,000 shs. *Apogee.................................. $ 1,750
225,000 Columbia/HCA Healthcare................. 8,212
100,000 *Coventry................................ 2,413
100,000 *Emcare Holdings......................... 1,450
827,450 *Foundation Health....................... 25,651
100,000 *Genesis Health Ventures................. 3,163
150,000 *Health Management (Class A)............. 3,750
250,000 *HEALTHSOUTH Rehabilitation.............. 9,250
200,000 *Lincare................................. 5,800
150,000 *Multicare............................... 2,906
168,000 *NovaCare................................ 1,218
235,000 Omnicare................................ 10,311
$1,000,000 Omnicare, 5.75%, 10/1/03................ 1,549
206,700 shs. Owens & Minor........................... 2,945
95,300 *Quorum Health Group..................... 1,811
237,000 *RightCHOICE Managed Care
(Class A)............................. 3,318
100,000 *SpaceLabs Medical....................... 2,275
175,000 Sterile Concepts........................ 2,800
410,000 *Sun Healthcare.......................... 10,404
432,900 *Syncor International.................... 3,030
112,700 *Synetic................................. 2,141
159,000 *TheraTx................................. 3,061
350,000 United HealthCare....................... 15,794
125,002
TOTAL HEALTH CARE 233,905
- -----------------------------------------------------------------------------
CONSUMER -- 21.6%
- -----------------------------------------------------------------------------
SOFT GOODS RETAILERS -- 1.0%
200,000 *Jos. A. Bank Clothiers.................. 800
200,000 *Nine West............................... 5,675
345,400 Phillips-Van Heusen..................... 5,267
90,100 *Proffitt's.............................. 1,960
154,800 *Shoe Carnival........................... 735
68,700 Talbots................................. 2,147
16,584
HARD GOODS RETAILERS -- 4.0%
279,900 *Brookstone.............................. 1,784
250,000 *Consolidated Stores..................... 4,656
399,900 *General Nutrition Companies............. 11,397
150,000 *Leslie's Poolmart....................... 1,950
441,000 *+Little Switzerland...................... 2,205
270,000 *Micro Warehouse......................... 9,450
242,300 *Neostar Retail Group.................... 2,423
900,000 *Office Depot............................ 21,600
153,700 *PETsMART................................ 5,264
200,000 *++Phar-Mor................................ 200
75,000 *Staples................................. 1,838
136,400 *TSC..................................... 2,796
27,800 *Whole Foods Market...................... 278
65,841
CONSUMER DURABLES -- 0.4%
200,000 shs. LADD Furniture.......................... 1,250
303,400 *Recoton................................. 5,537
6,787
CONSUMER NONDURABLES -- 3.8%
606,200 *Benson Eyecare.......................... 4,546
200,000 *Chic By H.I.S........................... 1,900
229,500 *Cygne Designs........................... 3,041
200,000 *Donnkenny............................... 2,950
131,800 *ERO..................................... 1,021
316,500 *Jones Apparel Group..................... 8,150
101,300 *Marisa Christina........................ 1,038
150,000 *Marker International.................... 1,050
409,843 *Nautica Enterprises..................... 12,193
161,700 *Norton McNaughton....................... 2,426
281,000 *Perrigo................................. 3,477
187,000 Rival................................... 3,179
1,000,000 *+Score Board............................. 3,000
185,000 St. Ives Laboratories................... 1,388
200,000 St. John Knits.......................... 5,725
150,000 *Tommy Hilfiger.......................... 6,769
61,853
RESTAURANTS -- 2.4%
230,000 *Boston Chicken.......................... 3,996
430,000 *Lone Star Steakhouse &
Saloon................................ 8,277
300,000 *Outback Steakhouse...................... 6,938
648,300 Sbarro.................................. 16,856
100,000 *Shoney's................................ 1,275
275,000 *+Volunteer Capital....................... 1,650
38,992
ENTERTAINMENT -- 5.4%
371,924 *Carmike Cinemas (Class A)............... 8,554
500,000 *+Graff Pay-Per-View...................... 5,437
34,200 Hollywood Park.......................... 359
75,000 Hollywood Park, $0.70 Dep.
Cv. Pfd............................... 788
385,400 *International Family
Entertainment (Class B)............... 4,866
100,000 *Mikohn Gaming........................... 825
55,000 *Movie Gallery........................... 1,416
40,970 *National Gaming......................... 492
365,000 *Players International................... 8,121
315,700 *President Riverboat Casinos............. 2,723
160,000 *Savoy Pictures.......................... 980
152,000 *Viacom (Class A)........................ 6,327
1,151,685 *Viacom (Class B)........................ 46,787
1,900,000 rts *Viacom, 9/29/95......................... 2,138
89,813
</TABLE>
8
<PAGE>
<TABLE>
<C> <S> <C>
CONSUMER SERVICES -- 4.6%
138,300 shs. *Apollo Group............................ $ 1,642
501,600 *Autotote (Class A)...................... 5,643
1,714,716 *CUC International....................... 57,443
100,000 *Glacier Water Services.................. 1,925
300,000 *Home Shopping Network................... 3,000
400,200 Sotheby's............................... 4,602
165,000 *Steck Vaughn............................ 908
75,300 *ValueVision International
(Class A)............................. 353
75,516
TOTAL CONSUMER 355,386
- -----------------------------------------------------------------------------
TECHNOLOGY -- 23.5%
- -----------------------------------------------------------------------------
COMPUTER HARDWARE -- 0.7%
400,000 *Silicon Graphics........................ 12,350
COMPUTER SOFTWARE -- 10.2%
450,000 Adobe Systems........................... 13,387
300,000 *Alias Research.......................... 5,362
1,000,000 Autodesk................................ 39,250
200,000 *Broderbund Software..................... 9,350
600,000 *Oracle Systems.......................... 26,475
50,000 *Powersoft............................... 4,113
15,000 SAP (DEM)............................... 8,499
600,000 *Sybase.................................. 31,050
244,500 *Symantec................................ 4,279
600,000 *Synopsys................................ 25,950
167,715
PERIPHERALS -- 0.7%
400,000 *Cognex.................................. 10,300
50,000 Molex................................... 1,725
12,025
NETWORKING & TELECOM EQUIPMENT -- 4.3%
135,000 *3Com.................................... 6,952
150,000 *Ascend Communications................... 6,113
150,000 *Cascade Communications.................. 9,225
400,000 *DSC Communications...................... 14,400
275,000 *Glenayre Technologies................... 15,881
95,000 *Itron................................... 1,876
140,000 *Shiva................................... 5,565
300,000 *StrataCom............................... 10,500
70,512
SEMICONDUCTORS -- 7.6%
243,400 *Actel................................... 1,978
100,000 *Applied Materials....................... 4,175
75,000 *Lam Research............................ 2,775
350,000 Linear Technology....................... 17,237
800,000 *Maxim Integrated Products............... 28,000
300,000 *Microchip Technology.................... 8,175
400,000 *Silicon Valley Group.................... 8,150
306,100 *Vishay Intertechnology.................. 14,999
550,000 shs. *Xilinx.................................. 32,450
250,000 *Zilog................................... 7,313
125,252
TOTAL TECHNOLOGY 387,854
- -----------------------------------------------------------------------------
BUSINESS SERVICES -- 25.3%
- -----------------------------------------------------------------------------
TELECOM SERVICES -- 4.0%
217,500 *ALC Communications...................... 6,770
70,600 *Arch Communications..................... 1,227
3,002,000 *Arch Communications (144a),
6.75%, 12/1/03........................ 3,160
290,000 shs. *CellStar................................ 6,561
171,411 *Cellular Communications,
$.01 Red. Cv. Pfd..................... 9,128
200,000 *Dial Page............................... 2,700
200,000 *International CableTel.................. 5,400
365,000 *Mobile Telecommunication Technologies... 7,117
412,500 * Paging Network......................... 13,819
250,000 *QUALCOMM................................ 5,937
150,000 *Vanguard Cellular....................... 3,825
65,644
COMPUTER SERVICES -- 9.2%
290,000 *Acxiom.................................. 7,902
256,000 *BISYS Group............................. 5,568
435,700 *Concord Computing....................... 10,784
245,000 *Envoy................................... 4,961
225,000 First Financial Management.............. 13,866
956,662 *FIserv.................................. 20,568
53,200 *Health Management Systems............... 1,729
30,500 National Data........................... 785
1,339,050 Paychex................................. 53,562
470,500 *Payco American.......................... 3,235
451,400 SEI..................................... 7,561
564,700 *SunGard Data Systems.................... 21,459
151,980
TRANSPORTATION -- 0.3%
200,000 *M.S. Carriers........................... 4,250
MEDIA & ADVERTISING -- 3.2%
125,000 *ACS Enterprises......................... 1,000
1,000,000 ADVO.................................... 17,250
144,000 *CAI Wireless............................ 1,044
339,200 *Catalina Marketing...................... 18,868
95,000 Central Newspapers (Class A)............ 2,672
50,000 *Clear Channel Communications............ 2,538
125,000 McClatchy Newspapers (Class A).......... 2,687
37,500 *Preferred Entertainment................. 375
400,000 *United International Holdings
(Class A)............................. 6,700
53,134
</TABLE>
9
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price New Horizons Fund / Statement of Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<C> <S> <C>
ENVIRONMENTAL -- 1.2%
200,000 shs. *Addington Resources..................... $ 1,850
220,500 *N-Viro International.................... 303
602,800 *Sanifill................................ 15,070
120,000 *United Waste Systems.................... 3,000
20,223
ENGINEERING & CONSTRUCTION -- 0.8%
961,200 +*Insituform Technologies
(Class A)............................. 11,174
250,000 *Stimsonite.............................. 2,562
13,736
MISCELLANEOUS BUSINESS SERVICES -- 6.2%
94,000 *Access Health Marketing................. 1,645
811,000 +*ADESA................................... 10,948
100,800 *Affiliated Computer Services
(Class A)............................. 2,167
263,400 *Career Horizons......................... 4,083
101,000 *Copart.................................. 1,742
225,000 *Corporate Express....................... 4,331
475,000 Danka Business Systems ADR.............. 10,153
142,500 *DIMAC................................... 1,799
87,300 *DiMark.................................. 1,179
315,000 *Franklin Quest.......................... 9,411
232,000 Gilbert Associates (Class A)............ 2,900
309,700 *Hospitality Franchise Systems........... 8,207
100,000 *Keane................................... 2,375
227,200 McGrath RentCorp........................ 3,692
20,190 *Medaphis................................ 929
217,500 *Medic Computer Systems.................. 6,634
130,800 *Orthodontic Centers of
America............................... 1,602
150,000 *Sealed Air.............................. 5,437
50,000 *Shorewood Packaging..................... 1,013
97,000 UniFirst................................ 1,176
465,600 *Viking Office Products.................. 14,201
300,000 +Watsco (Class A)........................ 4,987
250,000 *WorldCorp............................... 1,813
102,424
DISTRIBUTION -- 0.4%
550,000 *Alliance Entertainment.................. 2,544
320,000 *JP Foodservice.......................... 2,960
5,504
TOTAL BUSINESS SERVICES 416,895
- -----------------------------------------------------------------------------
ENERGY -- 3.8%
- -----------------------------------------------------------------------------
EXPLORATION & PRODUCTION -- 0.7%
300,387 Devon Energy............................ 5,482
115,000 Noble Affiliates........................ 2,846
210,000 Southwestern Energy..................... 3,124
11,452
ENERGY SERVICES -- 3.1%
475,000 shs. *BJ Services............................. 8,016
249,100 Camco International..................... 4,702
228,000 Coflexip ADR............................ 5,244
340,000 *Enterra................................. 6,460
67,043 *Geophysique (FRF)....................... 3,791
250,000 Moorco International.................... 3,687
251,500 *NS Group................................ 1,037
700,000 *Oceaneering International............... 7,175
246,000 *Smith International..................... 3,075
224,500 Sonat Offshore Drilling................. 3,985
300,000 *Tuboscope Vetco......................... 1,800
241,000 *Weatherford International............... 2,350
51,322
TOTAL ENERGY 62,774
- -----------------------------------------------------------------------------
INDUSTRIAL -- 3.7%
- -----------------------------------------------------------------------------
PAPER & FOREST PRODUCTS -- 0.5%
450,000 Albany International
(Class A)............................. 8,662
AUTO RELATED -- 0.6%
520,832 *Jason................................... 4,427
291,400 Methode Electronics
(Class A)............................. 4,808
9,235
MACHINERY -- 2.3%
75,000 *Advanced Ross........................... 1,463
225,000 Danaher................................. 11,756
200,000 Farrel.................................. 1,050
261,200 Flair................................... 4,832
225,000 *Gelman Sciences......................... 3,347
244,500 Greenfield Industries................... 5,746
493,900 TriMas.................................. 9,878
38,072
AEROSPACE & DEFENSE -- 0.2%
69,600 *ECC International....................... 766
250,000 *++ECC International....................... 2,475
250,000 wts.*++ECC International, 6/30/95.............. 0
3,241
SPECIALTY CHEMICALS -- 0.1%
136,700 shs. Synalloy................................ 2,426
TOTAL INDUSTRIAL 61,636
MISCELLANEOUS -- 1.0% 16,867
TOTAL COMMON STOCKS (COST $1,185,191) 1,615,580
</TABLE>
10
<PAGE>
- -----------------------------------------------------------------------------
Short-Term Investments -- 2.7%
- -----------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
COMMERCIAL PAPER -- 2.4%
$ 4,000,000 Asset Securitization
Cooperative,
4(2), 5.45%, 1/18/95.................... $ 3,948
2,000,000 B.B.V. Finance Delaware,
5.40%, 1/19/95.......................... 1,973
10,000,000 Countrywide Funding,
6.30%, 1/5/95........................... 9,986
5,000,000 Delaware Funding,
5.88%, 1/23/95......................... 4,974
5,000,000 Dover, 5.90%, 1/24/95.................... 4,973
8,000,000 Koch Industries,
6.25%, 1/3/95.......................... 7,994
5,000,000 MCA Funding, 4(2),
5.90%, 1/27/95......................... 4,971
58,000 President & Fellows
Harvard College,
6.00%, 1/3/95........................... 58
38,877
MEDIUM TERM NOTES -- 0.3%
5,000,000 Wells Fargo & Company, VR,
6.775%, 2/24/95......................... 5,012
TOTAL SHORT-TERM INVESTMENTS
(COST $43,889) 43,889
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES -- 100.7%
(COST $1,229,080) 1,659,469
- -----------------------------------------------------------------------------
Other Assets Less Liabilities (11,092)
NET ASSETS CONSISTING OF:
Accumulated realized gains/losses --
net of distributions..................... $ 20,968
Net unrealized gain........................ 430,389
Paid-in-capital applicable to
111,648,691 shares of $1.00 par
value capital stock outstanding;
200,000,000 shares authorized............ 1,197,020
---------
NET ASSETS $1,648,377
==========
NET ASSET VALUE PER SHARE $14.76
======
</TABLE>
- --------------------------------------------------------------------------------
+ Affiliated company
* Non-income producing
++ Securities contain some restrictions as to public resale -- total of
such securities at year-end amounts to 0.4% of net assets.
VR Variable rate
4(2) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors".
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers.
DEM German deutschemark
FRF French franc
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
T. Rowe Price New Horizons Fund / Year Ended December 31, 1994
<TABLE>
<CAPTION>
(Amounts in thousands)
<S> <C>
INVESTMENT INCOME
Income
Dividends...................................................... $ 5,032
Interest....................................................... 2,120
---------
Total income................................................... 7,152
---------
Expenses
Investment management.......................................... 11,403
Shareholder servicing.......................................... 3,196
Custody and accounting......................................... 259
Prospectus and shareholder reports............................. 153
Proxy and annual meeting....................................... 88
Registrations.................................................. 55
Legal and auditing............................................. 53
Interest expense............................................... 41
Directors...................................................... 38
Miscellaneous.................................................. 38
---------
Total expenses................................................. 15,324
---------
Net investment loss.............................................. (8,172)
---------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain on:
Securities .................................................... 120,088
Foreign currency transactions.................................. 42
---------
Net realized gain.............................................. 120,130
Change in net unrealized gain or loss on securities.............. (108,665)
---------
Net realized and unrealized gain................................. 11,465
---------
INCREASE IN NET ASSETS FROM OPERATIONS $ 3,293
=========
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
T. Rowe Price New Horizons Fund
<TABLE>
Year Ended December 31,
-------------------------------
1994 1993
----------- -----------
(Amounts in thousands)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment loss........................................... $ (8,172) $ (7,358)
Net realized gain ............................................ 120,130 296,612
Change in net unrealized gain or loss......................... (108,665) 7,529
---------- ----------
Increase in net assets from operations........................ 3,293 296,783
---------- ----------
Distributions to shareholders
Net realized gain ............................................ (146,497) (235,116)
---------- ----------
Capital share transactions/1/
Shares sold .................................................. 481,534 330,569
Distributions reinvested ..................................... 138,041 218,022
Shares redeemed .............................................. (455,716) (529,794)
---------- ----------
Increase in net assets from capital share transactions........ 163,859 18,797
---------- ----------
Increase in net assets ......................................... 20,655 80,464
NET ASSETS
Beginning of year............................................. 1,627,722 1,547,258
---------- ----------
End of year................................................... $1,648,377 $1,627,722
========== ==========
- --------------------------------------------------------------------------------------------------------------
/1/Capital share transactions (number of shares)
Shares sold ................................................ 30,376 20,506
Distributions reinvested ................................... 9,474 13,931
Shares redeemed ............................................ (28,895) (33,371)
---------- ----------
Increase in capital shares outstanding ..................... 10,955 1,066
========== ==========
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
T. Rowe Price New Horizons Fund / December 31, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price New Horizons Fund (the Fund) is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
A) Valuation - Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price on the day the valuations
are made. A security which 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 that are not traded on a particular day
are valued at a price within the limits of the latest bid and asked prices
deemed by the Board of Directors, or by persons delegated by the Board, best
to reflect fair value. Securities regularly traded in the over-the-counter
market are valued at the latest bid price.
Debt securities are generally traded in the over-the-counter market
and are valued at a price deemed best to reflect fair value as quoted by
dealers who make markets in these securities or by an independent pricing
service. Short-term debt securities are valued at their cost which, when
combined with accrued interest, approximates fair value.
For purposes of determining the Fund's net asset value per share, the
U.S. dollar value of all assets and liabilities initially expressed in
foreign currencies is determined by using the mean of the bid and offer
prices of such currencies against U.S. dollars quoted by a major bank.
Assets and liabilities 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 or under the supervision of the officers
of the Fund, as authorized by the Board of Directors.
B) Affiliated Companies - Investments in companies 5% or more of whose
outstanding voting securities are held by the Fund are defined as "Affiliated
Companies" in Section 2(a)(3) of the Investment Company Act of 1940.
C) Currency translation - Assets and liabilities are converted into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated into
U.S. dollars at the prevailing exchange rate on the dates of such
transactions. The effect of changes in foreign exchange rates on realized
and unrealized security gains or losses is reflected as a component of such
gains or losses.
D) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on an identified cost basis. Dividend income and distributions
to shareholders are recorded by the Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income
tax regulations and may differ from those determined in accordance with
generally accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term and U.S.
Government securities, aggregated $714,893,000 and $710,782,000,
respectively, for the year ended December 31, 1994.
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 and distribute all of
its taxable income.
In order for the Fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, $8,172,000
of undistributed net investment loss was reclassified as a decrease to
undistributed net realized gains during the year ended December 31, 1994.
The results of operations and net assets were not affected by the
reclassifications.
14
<PAGE>
At December 31, 1994, the aggregate cost of investments for federal
income tax and financial reporting purposes was $1,229,080,000 and net
unrealized gain aggregated $430,389,000, of which $548,259,000 related to
appreciated investments and $117,870,000 to depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The investment management agreement between the Fund and T. Rowe Price
Associates, Inc. (the Manager) provides for an annual investment management
fee, of which $938,000 was payable at December 31, 1994. The fee is computed
daily and paid monthly, and consists of an Individual Fund Fee equal to 0.35%
of average daily net assets and a Group Fee. The Group Fee is based on the
combined assets of certain mutual funds sponsored by the Manager or Rowe
- -Price Fleming International, Inc. (the Group). The Group Fee rate ranges from
0.48% for the first $1 billion of assets to 0.31% for assets in excess of $34
billion. At December 31, 1994, and for the year then ended, the effective
annual Group Fee rate was 0.34%. The Fund pays a pro rata share of the Group
Fee based on the ratio of its net assets to those of the Group.
In addition, the Fund has entered into agreements with the Manager
and two wholly-owned subsidiaries of the Manager, pursuant to which the Fund
receives certain other services. The Manager computes the daily share price
and maintains the financial records of the Fund. T. Rowe Price Services, Inc.
(TRPS) is the Fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the Fund. T. Rowe Price
Retirement Plan Services, Inc. provides subaccounting and recordkeeping
services for certain retirement accounts invested in the Fund. Additionally,
the Fund is one of several T. Rowe Price mutual funds (the Underlying Funds) in
which the T. Rowe Price Spectrum Growth Fund (Spectrum) invests. In accordance
with an Agreement between Spectrum, the Underlying Funds, the Manager and TRPS,
expenses from the operation of Spectrum are borne by the Underlying Funds based
on each Underlying Fund's proportionate share of assets owned by Spectrum.
The Fund incurred expenses pursuant to these related party agreements totaling
approximately $3,186,000 for the year ended December 31, 1994, of which
$325,000 was payable at year end.
NOTE 5 - BORROWING
Pursuant to the Fund's prospectus, the Fund may borrow up to 33/1//3% of its
total assets. During the year ended December 31, 1994, the Fund borrowed
amounts ranging from $20,000,000 to $30,000,000, each for a total of 7 days,
at rates ranging from 4.625% to 4.6875%. There were no borrowings
outstanding at December 31, 1994.
15
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
T. Rowe Price New Horizons Fund
<TABLE>
<CAPTION>
For a share outstanding throughout each
-----------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------
1994 1993 1992 1991 1990
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR................. $16.16 $15.53 $15.68 $10.61 $12.43
------ ------ ------ ------ ------
Investment Activities
Net investment income (loss)................... (0.07) (0.07) (0.04) 0.05 0.09
Net realized and unrealized gain (loss)........ 0.10 3.40 1.65 5.46 (1.29)
------ ------ ------ ------ ------
Total from Investment Activities................... 0.03 3.33 1.61 5.51 (1.20)
------ ------ ------ ------ ------
Distributions
Net investment income.......................... -- -- -- (0.05) (0.09)
Net realized gain.............................. (1.43) (2.70) (1.76) (0.39) (0.53)
------ ------ ------ ------ ------
Total Distributions................................ (1.43) (2.70) (1.76) (0.44) (0.62)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR....................... $14.76 $16.16 $15.53 $15.68 $10.61
====== ====== ====== ====== ======
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return....................................... 0.3% 22.0% 10.6% 52.3% (9.6)%
Ratio of Expenses to Average Net Assets............ 0.93% 0.93% 0.93% 0.92% 0.82%
Ratio of Net Investment Income to
Average Net Assets............................. (0.50)% (0.50)% (0.32)% 0.35% 0.72%
Portfolio Turnover Rate............................ 44.3% 49.4% 49.6% 32.5% 38.0%
Net Assets, End of Year (in thousands)............. $1,648,377 $1,627,722 $1,547,258 $1,470,440 $855,490
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
T. Rowe Price New Horizons Fund, Inc.
We have audited the accompanying statement of net assets of T. Rowe
Price New Horizons Fund, Inc. as of December 31, 1994, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of investments owned as of December 31, 1994, by correspondence
with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights,
referred to above, present fairly, in all material respects, the financial
position of T. Rowe Price New Horizons Fund, Inc. as of December 31, 1994,
the results of its operations, the changes in its net assets and financial
highlights for each of the respective periods stated in the first paragraph
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
January 23, 1995
17
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Services
- --------------------------------------------------------------------------------
To help shareholders monitor their current investments and make decisions
that accurately reflect their financial goals, T. Rowe Price offers a wide
variety of information and services--at no extra cost.
KNOWLEDGEABLE SERVICE REPRESENTATIVES
BY PHONE--Shareholder service representatives are available from 8:00 a.m. to
10:00 p.m., Monday - Friday, and weekends from 9:00 a.m. to 5:00 p.m., ET.
Call 1-800-225-5132 to speak directly with a representative who will be able
to assist you with your accounts.
IN PERSON--Visit one of our investor center locations to meet with a
representative who will be able to assist you with your accounts. While
there, you can drop off applications or obtain prospectuses and other
literature.
AUTOMATED 24-HOUR SERVICES
Tele*Access/(R)/ (1-800-638-2587) provides information such as account
balance, date and amount of your last transaction, latest dividend payment,
and fund prices and yields. Additionally, you have the ability to request
prospectuses, statements, account and tax forms; reorder checks; and initiate
purchase, redemption, and exchange orders for identically registered
accounts.
PC*Access/(R)/ provides the same information as Tele*Access, but on a
personal computer via dial-up modem.
ACCOUNT SERVICES
Checking--Write checks for $500 or more on any money market and bond
fund accounts (except the High Yield Fund and Emerging Markets Bond Fund).
Automatic Investing--Build your account over time by investing directly
from your bank account or paycheck with Automatic Asset Builder.
Additionally, Automatic Exchange enables you to set up systematic investments
from one fund account into another, such as from a money fund into a stock
fund. A low, $50 minimum makes it easy to get started.
Automatic Withdrawal--If you need money from your fund account on a
regular basis, you can establish scheduled, automatic redemptions.
Dividend and Capital Gains Payment Options--Reinvest all or some of your
distributions or take them in cash. We give you maximum flexibility and
convenience.
INVESTMENT INFORMATION
Combined Statement--A comprehensive overview of your T. Rowe Price
accounts. The summary page gives your earnings by tax category, provides
total portfolio value, and lists your investments by type--stock, bond, and
money market. Detail pages itemize account transactions by fund.
Quarterly Shareholder Reports--Portfolio managers review the performance
of the funds in plain language and discuss T. Rowe Price's economic outlook.
The T. Rowe Price Report--A quarterly newsletter with relevant articles
on market trends, personal financial planning, and T. Rowe Price's economic
perspective.
Insights--A library of information that includes reports on mutual fund
tax issues, investment strategies, and financial markets.
Detailed Investment Guides--Our widely acclaimed Asset Mix Worksheet,
College Planning Kit, Retirees Financial Guide, Retirement Planning Kit
(also available on disk for PC use), and Guide to Risk-Adjusted Performance
can help you determine and reach your investment goals.
DISCOUNT BROKERAGE
You can trade stocks, bonds, options, precious metals, and other securities
at a substantial savings over regular commission rates. Call a shareholder
service representative for more information.
18
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price No-Load Mutual Funds
- --------------------------------------------------------------------------------
STABILITY
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money
Market
Tax-Exempt Money
CONSERVATIVE INCOME
Adjustable Rate
U.S. Government
Short-Term Bond
Short-Term Global Income
Summit Limited-Term Bond
U.S. Treasury Intermediate
Florida Insured Intermediate
Tax-Free
Maryland Short-Term
Tax-Free Bond
Summit Municipal
Intermediate
Tax-Free Insured
Intermediate Bond
Tax-Free Short-Intermediate
Virginia Short-Term
Tax-Free Bond
INCOME
Global Government Bond
GNMA
New Income
Spectrum Income
Summit GNMA
U.S. Treasury Long-Term
California Tax-Free Bond
Georgia Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Tax-Free Income
Virginia Tax-Free Bond
AGGRESSIVE INCOME
Emerging Markets Bond
High Yield
International Bond
Tax-Free High Yield
CONSERVATIVE GROWTH
Balanced
Capital Appreciation
Dividend Growth
Equity Income
Equity Index
Growth & Income
Spectrum Growth
Value
GROWTH
Blue Chip Growth
European Stock
Growth Stock
International Stock
Japan
Mid-Cap Growth
New Era
Small-Cap Value
AGGRESSIVE GROWTH
Capital Opportunity
International Discovery
Latin America
New America Growth
New Asia
New Horizons
OTC
Science & Technology
PERSONAL STRATEGY FUNDS
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
Call if you want to know about any T. Rowe Price Fund. We'll send you a
prospectus with more complete information, including management fees and
other expenses. Read it carefully before you invest or send money.
19
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL REPORT
- --------------------------------------------------------------------------------
T. Rowe Price
- -------------
NEW HORIZONS FUND
DECEMBER 31, 1994
FOR YIELD, PRICE, LAST TRANSACTION, AND CURRENT BALANCE, 24 HOURS,
7 DAYS A WEEK, CALL:
1-800-638-2587 toll free
625-7676 Baltimore area
FOR ASSISTANCE WITH YOUR EXISTING FUND ACCOUNT, CALL:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. ROWE PRICE
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price New Horizons
Fund/(R)/.
T. Rowe Price
Invest With Confidence/(R)/
NHF
