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April 1, 2000
FUND PROFILE
T. ROWE PRICE
New Horizons Fund
An aggressive stock fund seeking long-term capital growth primarily through
investments in small, rapidly growing companies.
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
1-800-638-5660, or by visiting our Web site at www.troweprice.com.
TROWEPRICELOGO
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FUND PROFILE
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What is the fund's objective?
The fund seeks long-term capital growth by investing primarily in common
stocks of small, rapidly growing companies.
What is the fund's principal investment strategy?
We will invest primarily in a diversified group of small, emerging growth
companies, preferably early in the corporate life cycle before a company
becomes widely recognized by the investment community. The fund may also
invest in companies that offer the possibility of accelerating earnings
growth because of rejuvenated management, new products, or structural changes
in the economy. We will not necessarily sell a position in a company that has
grown beyond the developing stage if the company still fits the fund's other
investment criteria.
When choosing stocks, T. Rowe Price analysts look for small growth companies
that:
. have effective management;
. operate in fertile growth areas;
. demonstrate effective research, product development, and marketing;
. provide efficient service;
. possess pricing flexibility; and
. employ sound financial and accounting policies.
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.
The fund may sell securities for a variety of reasons, such as to secure
gains, limit losses, or redeploy assets into more promising opportunities.
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 1-800-638-5660.
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
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FUND PROFILE
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in the fund may prove incorrect, resulting in losses or poor performance even
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.
Investing in small companies involves greater risk than is customarily
associated with more established companies. Stocks of small companies are
subject to more abrupt or erratic price movements than larger-company stocks.
Small companies often have limited product lines, markets, or financial
resources, and their managements may lack depth and experience.
Growth stocks can be volatile for several reasons. Since they usually
reinvest a high proportion of earnings in their own businesses, they may lack
dividends that can cushion declines in a falling market. Also, since
investors buy these stocks because of their expected superior earnings
growth, earnings disappointments often result in sharp price declines. In
general, stocks with growth characteristics can have relatively wide price
swings as a result of the high valuations they can carry.
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 greater risk of investing in
smaller companies in an effort to achieve superior capital appreciation, the
fund could be an appropriate part of your overall investment strategy. 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.
. Equity investors should have a long-term investment horizon and be willing
to wait out bear markets.
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FUND PROFILE
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How has the fund performed in the past?
The bar chart and the average annual total return table indicate risk by
illustrating how much returns can differ from one year to the next. The
fund's past performance is no guarantee of its future returns.
The fund can also experience short-term performance swings, as shown by the
best and worst calendar quarter returns during the years depicted in the
chart.
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<TABLE>
<CAPTION>
Calendar Year Total Returns
"90" "91" "92" "93" "94" "95" "96" "97" "98" "99"
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <S>
-9.60 52.30 10.58 22.01 0.30 55.44 17.03 9.77 6.25 32.52
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</TABLE>
Quarter ended Total return
Best quarter 12/31/99 28.50%
Worst quarter 9/30/90 -26.40%
<TABLE>
Table 1 Average Annual Total Returns
<CAPTION>
Periods ended 3/31/00
1 year 5 years 10 years
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<S> <C> <C> <C>
New Horizons Fund 62.96% 23.97% 19.66%
Russell 2000 Growth Index 59.05 19.84 14.83
Lipper Small-Cap Fund Index 65.18 20.66 16.42
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</TABLE>
These figures include changes in principal value, reinvested dividends, and
capital gain distributions, if any.
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FUND PROFILE
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What fees or expenses will I pay?
The fund is 100% no load. There are no 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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FUND PROFILE
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<TABLE>
Table 2 Fees and Expenses of the Fund
<CAPTION>
Annual fund operating expenses
(expenses that are deducted from fund assets)
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<S> <C>
Management fee 0.67%/ // /
Other expenses 0.22%
Total annual fund operating 0.89%/ // /
expenses
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</TABLE>
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, 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>
$91 $284 $493 $1,096
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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 mone market funds directly to the investing public.
John H. Laporte manages the fund day-to-day and has been chairman of its
Investment Advisory Committee since 1988. He joined T. Rowe Price in 1976 and
has been managing investments since 1984.
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.
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FUND PROFILE
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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.
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202
www.troweprice.com
LOGO
RPS F42-035
T. Rowe Price Investment Services, Inc., Distributor
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