<PAGE>
Annual Report
NEW HORIZONS FUND
DECEMBER 31, 1999
[LOGO OF T. ROWE PRICE]
<PAGE>
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
New Horizons Fund
. The market posted a strong advance, although gains were concentrated in
technology and other high-growth stocks.
. The New Horizons Fund finished the year with a strong return, outpacing
most benchmarks but lagging funds with higher technology exposure.
. The portfolio contained three technology-related stocks that increased more
than tenfold.
. Holdings in technology sectors grew, while business services and health
care positions declined.
. Despite the concentration of market returns, we remain committed to a
well-diversified portfolio of emerging growth companies.
UPDATES AVAILABLE
For updates on T. Rowe Price funds following the end of each calendar quarter,
please see our Web site at www.troweprice.com.
<PAGE>
FELLOW SHAREHOLDERS
A powerful fourth quarter advance, led by surging technology stocks, carried the
stock market to record highs at the end of the year. The Standard & Poor's 500
Stock Index gained more than 20% for the year. This was its fifth consecutive
year of total returns above 20%, an unprecedented feat in stock market history.
Robust economic growth, stronger-than-expected corporate profits, benign
inflation, and continued public optimism toward the stock market created a very
positive investment climate.
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
Periods Ended 12/31/99 6 Months 12 Months
- --------------------------------------------------------------------------------
New Horizons Fund 23.33% 32.52%
Russell 2000 Growth Index 26.83 43.09
Russell 2000 Index 10.96 21.26
Lipper Small Cap Fund Index 29.71 41.93
S&P 500 7.71 21.04
Small-company stocks, the focus of your fund's investment program, also soared
late in the year, although only a relatively narrow group of technology and
biotechnology stocks led the advance. While the Russell 2000 Index of small
stocks actually edged out the performance of the S&P 500 for the year, the
average smaller-cap stock underperformed the S&P 500 by a substantial margin for
the sixth consecutive year.
Against this backdrop, your fund rose 23.33% for the six months and 32.52% for
the full year, aided by strong gains in the technology sector. The fund
outperformed the Russell 2000 for both periods but lagged the technology-laden
Russell 2000 Growth Index and our Lipper peer group. The fund had one of its
best annual showings in 1999 -- only eight times in the fund's 39-year history
have annual returns been greater.
The fund's longer-term record compared favorably against the relevant small-cap
indices. For the five- and 10-year periods ended December 31, 1999, the fund
returned 181.18% and 423.74%, respectively, compared to 116.37% and 251.64% for
the Russell 2000 and 138.54% and 255.08% for the Russell 2000 Growth Index.
1
<PAGE>
YEAR-END DISTRIBUTIONS
On December 14, 1999, your Board of Directors declared a short-term capital gain
distribution of $0.94 per share and a long-term capital gain distribution of
$2.08 per share to shareholders of record on that date. These were paid on
December 16. You should already have received your check or statement reflecting
these distributions, as well as Form 1099-DIV summarizing this information for
1999 tax purposes.
MARKET ENVIRONMENT
The U.S. economy was much stronger in 1999 than most economists predicted and
created a solid underpinning for continued stock market gains. It was the fourth
consecutive year of at least 4% growth, very surprising following the economic
strength earlier in the decade. In fact, the economy is entering its tenth year
of growth, an all-time record. Corporate profits also continue to exceed
forecasts, with growth rates in the mid-teens despite a continued drag from
weaker overseas economies. Unemployment remains at record lows, inflation stands
near 2%, and consumer confidence remains at record highs. The economy was led by
strength in the consumer sector and by technology-based capital spending.
The stock market's strength particularly stood out considering the sharp
increase in long-term interest rates during the year. Long-term rates rose
approximately 150 basis points, ending the year with yields approaching 6.5%.
The bond market endured its worst year since 1994. However, the political
climate was beneficial for stocks. In Washington, a stalemate between the
President and the Congress blocked any major new initiatives and allowed the
federal budget surplus to accumulate, which Wall Street applauded.
Stock prices declined in the September quarter but rallied powerfully late in
the year. The market's advance, however, was not broadbased - technology stocks
and a small group of large-cap blue chips were the only real winners. Tech
stocks accounted for nearly 70% of the gain in the S&P 500 and only slightly
less of the increase in the Russell 2000. The technology sector of the S&P 500
rose by better than 70% for the second consecutive year while telecommunications
and Internet-related companies posted far higher gains. Without technology, the
market would have posted only a single-digit advance for the year.
2
<PAGE>
The strength in technology stocks masked weakness elsewhere. Only about half of
the stocks in the S&P 500 generated gains for the year and approximately
one-third of all stocks declined 20% or more. While all the major market indices
reached record highs on a regular basis as the year went on, the Russell 2000
only barely exceeded its April 1998 peak. By this measure, small-cap stocks
significantly underperformed for the sixth consecutive year.
In addition, the small-cap market reported the widest gap ever recorded between
the performance of small-cap growth and small-cap value stocks. Small-cap
growth, aided by sharp gains in technology and biotechnology stocks, rose 43%
for the year; small-cap value issues actually declined in the aggregate, as
noted in the accompanying table.
- -----------------------
SMALL-CAP STOCK RETURNS
- --------------------------------------------------------------------------------
Periods Ended 12/31/99 6 Months 12 Months
- --------------------------------------------------------------------------------
Russell 2000 Index 10.96% 21.26%
Russell 2000 Growth Index 26.83 43.09
Russell 2000 Value Index -6.41 -1.49
PORTFOLIO REVIEW
In general, the fund's small-cap growth focus helped performance but its broadly
diversified exposure across economic sectors was not rewarded due to the
concentration of returns among technology-related issues. For this reason, the
fund lagged other small-cap growth funds with a heavier focus on technology
stocks. We are somewhat wary of how extended the valuations of small-cap
technology issues are compared with other small-cap growth stocks and continue
to believe that a more diversified portfolio will deliver superior returns over
time.
The fund's returns for the 6- and 12-month periods were concentrated in a few
sectors, led by technology for both periods. Within this sector,
Internet-related e-commerce stocks were particularly strong with most holdings
more than doubling in 1999. Telecommunications services holdings, which we
classify under business services, were equally strong; many of these also more
than doubled in price during the year. Finally, biotechnology stocks surged late
in the year as Wall Street became enamored with the implications of advances in
the field of genomics and with the product development pipeline at many
biotechnology companies.
3
<PAGE>
The rest of the portfolio, however, languished. Consumer, business services,
financial, and industrial sector positions contributed little or nothing
regardless of their strong earnings results. Earnings shortfalls, however, were
severely punished, and many holdings declined 50% or more after reporting
earnings below expectations.
Three portfolio holdings deserve particular recognition because they appreciated
more than tenfold during the year, a feat that has rarely if ever happened in
the fund's long history. Omnipoint, a digital wireless services operator that
had serious financial difficulties in 1998, was able to resolve these problems
and agreed to merge with another large wireless company, VoiceStream
Communications. The deal is pending. Explosive growth in wireless subscribers
and the recognition that digital wireless networks can be used for data as well
as voice transmission led to huge gains among stocks in this sector. Omnipoint
was the fund's second-largest holding at year-end.
We purchased Optical Coating Laboratory, a company with unique capabilities in
the area of optical components, in September 1998 at an average price of $15 to
$16. Wall Street had ignored this company and its capabilities for years, only
belatedly recognizing that the firm's technology could lower telecommunications
costs. The stock soared in 1999. Then, late in the year, the company agreed to
be acquired by JDS Uniphase, another leader in optical components, and the stock
had another meteoric increase, ending the year at $295.
Liberate Technologies was the fund's third "10 bagger." The company provides
critical software used to facilitate interactive television and the delivery of
Internet content to the TV. It came public in July 1999 at $16. The overall
market was somewhat soft at the time, and we were able to accumulate a
meaningful position at close to the initial public offering (IPO) price. Wall
Street became infatuated with Liberate and the e-commerce potential of
interactive television as the year went on and Liberate soared, ending the year
at $256. We sold part of our position as the stock rose but still held a large
position at year-end.
Other notable winners for the fund last year were long-time semiconductor
holdings Analog Devices, Maxim Integrated Products, and Xilinx, each of which
more than doubled. Pegasus Communications, a provider of satellite TV services
to non-metropolitan areas, rose almost fourfold as growth in satellite TV
subscribers accelerated. Lastly, biotechnology stocks were strong performers
across the board, led by Abgenix, Affymetrix, Cephalon, MedImmune, Millennium
Pharmaceuticals, and Viropharma.
4
<PAGE>
Of course, a number of holdings detracted from performance. In the most recent
six-month period, dental distributor Henry Schein, education services provider
Sylvan Learning Systems, and business services provider Lason Systems all fell
sharply on disappointing earnings prospects. For the full year, each of the
above, as well as software company Network Associates and health care services
companies Total Renal Care Holdings and Omnicare, were major decliners.
There were several shifts in sector weightings in 1999, the most significant of
which was a sharp increase in technology holdings from 20% to 28% of assets. We
reduced business services holdings from 37% to 32% after a year filled with news
of earnings shortfalls in the sector. Health care weightings fell slightly from
17% to 15%, despite increases in the biotechnology area, primarily because of a
sharp decline in health care services holdings.
- ----------------------
SECTOR DIVERSIFICATION
- --------------------------------------------------------------------------------
12/31/98 6/30/99 12/31/99
- --------------------------------------------------------------------------------
Financial 4% 4% 3%
Health Care 17 12 15
Consumer 15 18 14
Technology 20 23 28
Business Services 37 36 32
Energy 1 3 3
Industrial 2 2 1
Reserves 4 2 4
Total 100% 100% 100%
OUTLOOK
The U.S. economy entered the new millennium with strong momentum. Record
employment levels and high consumer confidence domestically, as well as
improving fundamentals in most other parts of the globe, should keep domestic
economic growth at near-record levels in 2000. Accelerating technology spending
is likely to contribute to economic growth as well. Corporate earnings growth
actually strengthened late in 1999. With above-trend economic growth and some
signs of a pickup in inflation, the Fed is likely to raise rates in the near
term to try to rein in growth to a more sustainable level. Long-term interest
rates have already moved higher in January and may rise modestly again. What
effect the upcoming presidential and congressional elections may have on the
markets is unknown, but we think little meaningful legislation will be passed
this year, which is good for the stock market.
5
<PAGE>
With this backdrop, the stock market should have another positive year, but the
key issue for investors is whether the market will broaden. It is not simply a
question of small-caps versus large-caps, but whether market leadership will
rotate beyond the recent leaders in technology, communications, and
biotechnology. The valuation disparity between these market-leading sectors and
the rest of the market is unprecedented. Last year's leaders have remained in
the forefront early this year, but we believe a narrowing in the valuation gap
in the market is likely at some point. The majority of stocks, particularly in
the small-cap sector, appear very attractively priced and should hold up
reasonably well in any market correction.
Your fund's relative valuation measures remain favorable when compared with the
broad market. Its P/E compared with the S&P 500 was at a very inexpensive 1.03
as of year-end, near the low end of its historical range, as shown on the chart
on page 7. However, excluding the technology and biotechnology companies, which
are selling at all-time record valuations, the rest of the portfolio sells at a
substantial discount to the market. Therefore, we remain committed to
maintaining a broadly diversified portfolio of emerging growth companies in all
market sectors and believe the portfolio is well positioned to deliver
attractive returns in 2000 and beyond.
Respectfully submitted,
/s/ John H. Laporte
John H. Laporte
President and Chairman of the Investment Advisory Committee
January 28, 2000
6
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
[GRAPH]
6/64 20.60
6/71 28.00
6/78 9.50
6/85 15.00
6/92 16.80
12/99 28.30
[GRAPH]
[NO POINTS AVAILABLE]
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
12/31/99
- --------------------------------------------------------------------------------
Analog Devices 2.5%
Omnipoint 2.0
Xilinx 1.9
Maxim Integrated Products 1.8
Synopsys 1.7
- --------------------------------------------------------------------------------
Catalina Marketing 1.6
Infinity Broadcasting 1.5
PSINet 1.2
Pegasus Communications 1.2
Burr Brown 1.2
- --------------------------------------------------------------------------------
Altera 1.2
BISYS Group 1.1
Eagle USA Air Freight 1.1
BJ Services 1.0
Affiliated Computer Services 1.0
- --------------------------------------------------------------------------------
Liberate Technologies 1.0
WebTrends 1.0
Optical Coating Laboratory 1.0
Electronics for Imaging 1.0
Cognex 1.0
- --------------------------------------------------------------------------------
Parametric Technology 0.9
ISS Group 0.8
Radian Group 0.8
Outback Steakhouse 0.8
Lamar Advertising 0.8
- --------------------------------------------------------------------------------
Total 31.1%
Note: Table excludes reserves.
8
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
- --------------------
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended 12/31/99
Ten Best Contributors Ten Worst Contributors
- --------------------------------------------------------------------------------
Omnipoint 45 cents Henry Schein -17 cents
Liberate Technologies * 38 Sylvan Learning Systems 14
Analog Devices 33 Lason ** 13
Adobe Systems ** 24 Outback Steakhouse 12
Xilinx 24 Comfort Systems USA 9
Optical Coating Laboratory 21 Total Renal Care Holdings 9
Pegasus Communications 21 Jones Lang LaSalle 8
Citrix Systems 19 United Rentals 8
Parametric Technology 17 SunGard Data Systems 8
Maxim Integrated Products 16 Mutual Risk Management 8
- --------------------------------------------------------------------------------
Total 258 cents Total -106 cents
12 Months Ended 12/31/99
Ten Best Contributors Ten Worst Contributors
- --------------------------------------------------------------------------------
Omnipoint 55 cents Network Associates ** -23 cents
Analog Devices 48 Henry Schein 23
Adobe Systems ** 45 Total Renal Care Holdings 19
Xilinx 42 Sylvan Learning Systems 17
Liberate Technologies * 38 Omnicare 16
PSINet 38 Lason ** 13
Maxim Integrated Products 30 SunGard Data Systems 12
Optical Coating Laboratory 29 Orthodontic Centers of America 10
Pegasus Communications 27 Boron LePore & Associates 10
Citrix Systems * 25 Mutual Risk Management 10
- --------------------------------------------------------------------------------
Total 377 cents Total -153 cents
*Position added
**Position eliminated
9
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
- ----------------------
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
This chart shows the value of a hypothetical $10,000 investment in the fund over
the past 10 fiscal year periods or since inception (for funds lacking 10-year
records). The result is compared with benchmarks, which may include a
broad-based market index and a peer group average or index. Market indexes do
not include expenses, which are deducted from fund returns as well as mutual
fund averages and indexes.
[GRAPH]
Russell 2000 Lipper Small Cap
Growth Index Fund Index New Horizons Fund
12/31/89 10,000 10,000 10,000
12/90 8,259 8,622 9,037
12/91 12,486 12,807 13,764
12/92 13,457 14,239 15,221
12/93 15,256 16,649 18,571
12/94 14,886 16,569 18,627
12/95 19,507 21,808 28,954
12/96 21,704 24,941 33,885
12/97 24,513 28,687 37,197
12/98 24,815 28,441 39,521
12/99 35,508 40,368 52,374
- ------------------------------------
AVERAGE ANNUAL COMPOUND TOTAL RETURN
- --------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
Periods Ended 12/31/99 1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
New Horizons Fund 32.52% 15.62% 22.97% 18.01%
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
10
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year
Ended
12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
Beginning of period $ 23.34 $ 23.30 $ 21.77 $ 20.50 $ 14.76
Investment activities
Net investment income (loss) (0.15) (0.15) (0.12) (0.08) (0.04)
Net realized and
unrealized gain (loss) 7.36 1.46 2.23 3.54 8.19
Total from
investment activities 7.21 1.31 2.11 3.46 8.15
Distributions
Net realized gain (3.02) (1.27) (0.58) (2.19) (2.41)
NET ASSET VALUE
End of period $ 27.53 $ 23.34 $ 23.30 $ 21.77 $ 20.50
Ratios/Supplemental Data
Total return* 32.52% 6.25% 9.77% 17.03% 55.44%
Ratio of total expenses to
average net assets 0.90% 0.89% 0.88% 0.90% 0.90%
Ratio of net investment
income (loss) to average
net assets (0.66)% (0.65)% (0.57)% (0.41)% (0.23)%
Portfolio turnover rate 44.7% 41.2% 45.2% 41.4% 55.9%
Net assets, end of period
(in millions) $ 6,022 $ 5,228 $ 5,104 $ 4,363 $ 2,855
</TABLE>
* 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.
11
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
December 31, 1999
- ------------------------
PORTFOLIO OF INVESTMENTS Shares Value
- --------------------------------------------------------------------------------
In thousands
COMMON STOCKS AND WARRANTS 95.5%
FINANCIAL 3.2%
Bank and Trust 0.1%
TeleBanc Financial * 200,000 $ 5,181
5,181
Insurance 1.6%
E.W. Blanch Holdings 200,000 12,250
Mutual Risk Management * 900,000 15,131
Presidential Life 977,200 17,926
Radian Group 1,000,000 47,750
-----------
93,057
-----------
Financial Services 1.5%
Affiliated Managers Group * 400,000 16,175
eSpeed (Class A) * 200,000 7,131
Financial Federal +* 900,000 20,532
Investors Financial Services 160,000 7,345
Jones Lang LaSalle * 350,000 4,156
Legg Mason 600,000 21,750
Nextcard 500,000 14,406
-----------
91,495
-----------
Total Financial 189,733
-----------
HEALTH CARE 14.7%
Pharmaceuticals 1.4%
Alkermes * 650,000 31,891
Collagenex Pharmaceuticals * 182,800 4,513
Emisphere Technologies * 233,600 7,015
King Pharmaceuticals * 110,000 6,160
Magainin Pharmaceuticals, Warrants, 8/6/01 *++ 337,299 0
Noven Pharmaceuticals * 530,000 9,639
PathoGenesis * 225,800 4,819
Shire Pharmaceuticals ADR * 450,000 13,022
United Therapeutics * 220,000 10,175
-----------
87,234
-----------
12
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Biotechnology 8.7%
Abgenix * 235,000 $ 30,667
Affymetrix * 180,000 30,538
Alexion Pharmaceutical * + 800,000 24,250
Anesta * + 833,200 14,269
Aradigm * 450,000 4,303
Aurora Biosciences * 325,000 8,572
Aviron * 88,000 1,392
Cephalon * 550,000 19,078
Collateral Therapeutics * 200,000 3,944
COR Therapeutics * 850,000 22,897
Cubist Pharmaceuticals * 450,000 8,719
CV Therapeutics * 163,000 4,248
Enzon * 170,000 7,352
Epix Medical * + 700,000 7,109
Gilead Sciences * 442,600 23,928
Guilford Pharmaceuticals * 80,000 1,340
Human Genome Sciences * 114,600 17,484
IDEC Pharmaceuticals 70,000 6,871
ILEX Oncology * 195,000 4,741
Imclone Systems * 390,000 15,429
Incyte Pharmaceuticals * 250,000 14,789
Inhale Therapeutic Systems * + 875,000 37,270
MedImmune * 244,700 40,574
Millennium Pharmaceuticals * 85,000 10,362
Neurocrine Biosciences * + 1,005,700 24,765
NPS Pharmaceuticals * + 1,400,000 17,544
Progenics Pharmaceuticals * 75,000 3,666
Qiagen NV * 100,000 7,675
QLT PhotoTherapeutics * 625,000 36,641
SangStat Medical * 190,000 5,647
Serologicals * + 1,825,000 11,121
Titan Pharmaceuticals * 190,000 3,610
Transkaryotic Therapies * 182,500 7,032
Triangle Pharmaceuticals * 1,415,000 18,085
Trimeris * 350,000 8,291
Viropharma * 382,300 14,217
Visible Genetics * 140,000 4,165
----------
522,585
----------
13
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Medical Instruments and Devices 2.2%
Mentor 1,000,000 $ 25,937
Mettler Toledo International * 250,000 9,547
Optical Coating Laboratory 200,000 58,950
ResMed * 250,000 10,438
Sybron International * 1,000,000 24,687
Waters * 56,700 3,005
---------
132,564
---------
Health Care Services 1.7%
AmeriPath * 1,000,000 8,219
Boron Lepore & Associates * + 1,030,000 6,824
Immunomedics * 425,000 5,233
Medical Manager * 112,700 9,484
Omnicare 2,000,000 24,000
Omnicare, Warrants, 8/11/00 * 105,253 0
Renal Care Group * 1,500,000 35,203
Total Renal Care Holdings * 1,940,400 12,976
US Oncology * 159,100 776
---------
102,715
---------
Broadcasting 0.5%
Caliper Technologies * 200,000 13,338
Maxygen * 160,000 11,420
Tularik * 47,500 1,539
Visible Genetics * 250,000 6,694
---------
32,991
---------
Pharmaceuticals and Biotechnology 0.2%
Coulter Pharmaceutical * 425,000 9,669
---------
9,669
---------
Total Health Care 887,758
---------
CONSUMER 13.8%
Soft Goods Retailers 1.3%
Jo Ann Stores (Class B) * 470,000 4,729
Pacific Sunwear * 1,380,000 43,944
Urban Outfitters * + 1,087,100 31,730
---------
80,403
---------
14
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Hard Goods Retailers 3.6%
Casey's General Stores 2,000,000 $ 20,938
Cost Plus * 300,000 10,659
CSK Auto * + 1,500,000 26,250
Discount Auto Parts * 798,700 14,427
Duane Reade * + 1,380,000 38,036
O'Reilly Automotive * 1,800,000 39,206
Office Depot * 600,000 6,563
Restoration Hardware * 600,000 4,031
Sonic Automotive (Class A) * 1,000,000 9,750
TSC * + 800,000 12,900
Tweeter Home Entertainment Group * 750,000 26,531
Wild Oats Markets * 450,000 9,970
---------
219,261
---------
Consumer Nondurables 2.1%
American Italian Pasta (Class A) * 500,000 15,375
Linens `n Things * 200,000 5,925
Natrol * 600,000 4,294
Nautica Enterprises * + 1,750,000 19,852
Ocular Sciences * 300,000 5,662
Quicksilver * + 1,250,000 19,375
Rayovac * 850,000 16,044
Wesley Jessen VisionCare * + 1,100,000 41,525
---------
128,052
---------
Restaurants 2.0%
O' Charley's * 267,400 3,476
Outback Steakhouse * 1,750,000 45,500
P F Chang's China Bistro * 500,000 12,563
Papa John's International * 750,000 19,570
Sonic * + 1,300,000 36,644
---------
117,753
---------
Food and Beverages 0.1%
United Natural Foods * 258,000 3,120
---------
3,120
---------
Entertainment 2.0%
American Classic Voyages * 550,000 19,181
Dover Downs Entertainment 300,000 5,625
Imax * 1,000,000 27,406
15
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Intrawest * 300,000 $ 5,194
SFX Entertainment (Class A) * 1,000,000 36,188
Speedway Motorsports * 500,000 13,906
Travel Services International * 295,500 2,733
Vail Resorts * 500,000 8,969
-------------
119,202
-------------
Consumer Services 2.7%
Advantage Learning Systems * 250,000 2,820
Apollo Group (Class A) * 1,500,000 30,047
Avis Rent A Car * 1,042,500 26,649
Bright Horizons Family Solution * 500,000 9,312
Caliber Learning Network * 560,000 1,540
Devry * 300,000 5,588
Extended Stay America * 2,000,000 15,250
ITT Educational Services 250,000 3,859
Learning Tree International * 250,000 6,992
School Specialty * 400,000 6,013
Strayer Education * + 800,000 16,000
Sunterra * 1,250,000 14,375
Sylvan Learning Systems * 2,000,000 26,250
-------------
164,695
-------------
Total Consumer 832,486
-------------
TECHNOLOGY 27.7%
Computer Software 7.7%
Avant * 1,200,000 18,037
Citrix Systems * 300,000 36,891
Excalibur Technologies * 150,000 3,103
Great Plains Software * 500,000 37,391
HNC Software * 175,000 18,545
Informatica * 175,000 18,419
ISS Group * 675,000 47,967
Keynote Systems * 200,000 14,550
Mission Critical Software * 250,000 17,516
National Instruments * 600,000 23,081
Parametric Technology * 2,049,100 55,390
Peerless Systems * 400,000 3,162
16
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Quintus * 100,000 $ 4,581
SalesLoggix * 350,000 14,372
Synopsys * 1,500,000 99,891
Verity * 400,000 17,012
Visio * 724,200 34,399
464,307
Semiconductors and Components 12.8%
Altera * 1,400,000 69,387
Analog Devices * 1,600,000 148,800
Applied Micro Circuits * 150,000 19,106
Benchmark Electronics * 300,000 6,881
Burr Brown * 1,950,000 70,322
Cognex * 1,500,000 58,453
HI/FN * 250,000 9,680
Lattice Semiconductor * 950,000 44,977
Linear Technology 400,000 28,625
Maxim Integrated Products * 2,300,000 108,459
Methode Electronics (Class A) 600,000 19,238
Micrel * 650,000 37,050
Molex 97,656 5,533
SIPEX * + 1,200,000 29,437
Xilinx * 2,500,000 113,672
769,620
Networking and Telecom Equipment 1.2%
ADC Telecommunications * 200,000 14,506
Airnet Commerce * 100,000 3,644
Concord Communications * + 775,000 34,609
Netsolve * 250,000 7,859
Sonicwall * 300,000 12,056
72,674
Computer Hardware/Peripherals 1.0%
Electronics for Imaging * 1,000,000 58,625
58,625
E-Commerce 5.0%
1-800 Flowers.com (Class A) 500,000 5,344
CareInsite * 255,000 20,535
CYBERSOURCE * 450,000 23,372
Drugstore.Com * 100,000 3,653
17
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Liberate Technologies * 240,000 $ 61,590
Loislaw * 450,000 17,803
PSINet * 1,200,000 74,213
Sterling Commerce * 700,000 23,844
WebTrends * + 750,000 60,563
Wink Communications * 200,000 12,006
302,923
Total Technology 1,668,149
BUSINESS SERVICES 31.4%
Telecom Services 5.3%
AT & T Canada (Class B) ADR * 800,000 32,150
Brightpoint * 1,500,000 19,781
Crown Castle International * 107,300 3,440
Intermedia Communications * 350,000 13,563
Metromedia International * 1,000,000 4,750
MGC Communications * 250,000 12,641
Microcell Telecommunications (Class B) * 750,000 24,656
Millicom International Cellular * 500,000 31,125
NTL * 333,332 41,542
Omnipoint * 1,000,000 120,437
Pinnacle Holdings * 400,000 17,100
321,185
Computer Services 4.5%
Affiliated Computer Services (Class A) * 1,350,000 62,100
BISYS Group * 1,000,000 65,188
Inspire Insurance Solutions * 600,000 2,831
National Data 1,250,000 42,422
NOVA * 1,350,000 42,609
Paychex 500,000 19,984
SunGard Data Systems * 1,478,700 35,119
270,253
Distribution 3.4%
Aviation Sales * 500,000 8,250
Daisytek International * 750,000 17,508
Henry Schein * 2,000,000 26,437
MSC (Class A) * 1,750,000 23,188
18
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Tech Data * 500,000 $ 13,578
U.S. Foodservice * 2,500,000 41,875
United Stationers * 1,000,000 28,656
Watsco 2,000,000 23,125
White Cap Industries * 415,000 6,212
Wilmar Industries * + 950,000 16,447
205,276
Transportation 1.2%
C.H. Robinson Worldwide 210,000 8,354
Eagle USA Air Freight * + 1,482,800 64,085
72,439
Media and Advertising 8.0%
ADVO * 1,155,000 27,431
Catalina Marketing * 835,000 96,651
Classic Communications * 400,000 14,675
Clear Channel Communications 499,999 44,625
E4L * 1,000,000 2,500
Emmis Broadcasting (Class A) * 300,000 37,397
Entercom Communications * 150,000 9,900
Infinity Broadcasting (Class A) * 2,470,077 89,386
Lamar Advertising (Class A) * 750,000 45,352
NDS Group * 105,000 3,209
Pegasus Communications (Class A) * 750,000 72,656
Radio Unica Communications * 100,000 2,919
Sinclair Broadcast Group (Class A) * 1,535,000 18,756
Young Broadcasting (Class A) * 332,300 16,937
482,394
Environmental 0.6%
Casella Waste Systems (Class A) * + 1,000,000 18,907
Catalytica * 250,000 3,406
U.S. Liquids * 350,000 2,931
Waste Connections * 500,000 7,172
32,416
Engineering and Construction 0.5%
Tetra Tech * 1,250,000 19,297
Toll Brothers * 500,000 9,312
28,609
19
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Miscellaneous Business Services 7.9%
Cambridge Technology Partners * 250,000 $ 6,570
Career Blazers * 200,000 1,350
CBT Group ADR * 500,000 16,781
Comfort Systems USA * 1,750,000 12,906
Consolidated Graphics * 600,000 8,962
Cysive * 55,500 4,029
EMS Technologies * 125,400 1,442
F. Y. I. * 250,000 8,508
G & K Services (Class A) * 200,000 6,419
Global Imaging Systems * + 1,100,000 13,441
Hagler Bailly * + 1,250,000 6,289
Infousa 1,405,300 19,630
Iron Mountain * 450,000 17,691
Mastech * 150,000 3,717
MemberWorks * 237,000 7,858
META Group * + 1,125,000 21,516
Metamor Worldwide * 330,000 9,632
Modis Professional Services * 1,000,000 14,250
New England Business Service 200,000 4,888
NFO Worldwide * + 2,000,000 44,750
Official Payments 150,000 7,861
Orthodontic Centers of America * + 3,000,000 35,812
Predictive Systems * 65,900 4,354
Prepaid Legal Services * 500,000 12,000
ProBusiness Services * 110,000 3,953
Professional Staff ADR * + 600,000 3,394
Romac International * 1,800,000 24,244
SITEL * 1,500,000 10,500
Snyder Communications 702,000 13,514
Snyder Communications * 175,500 2,155
SPR * + 1,450,500 8,703
StaffMark * 1,250,000 9,453
Symyx Technologies * 150,000 4,481
Tanning Technology * 126,000 7,395
Tier Technologies (Class B) * 1,100,000 9,298
Trammell Crow * 1,000,000 11,625
20
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
Viant * 150,000 $ 14,672
West TeleServices * 545,300 13,377
Xpedior Incorporated * 201,500 5,799
Zebra Technologies (Class A) * 744,000 43,175
476,394
Total Business Services 1,888,966
ENERGY 2.7%
Exploration and Production 0.7%
Barrett Resources * 450,000 13,247
Devon Energy 300,387 9,875
Key Energy * 3,015,000 15,640
Noble Affiliates 200,000 4,288
43,050
Energy Services 2.0%
BJ Services 1,500,000 62,719
Coflexip ADR 200,000 7,550
Cooper Cameron * 500,000 24,469
National Oilwell * 350,000 5,490
Smith International * 400,000 19,875
120,103
Total Energy 163,153
INDUSTRIAL 1.2%
Paper and Forest Products 0.0%
Lydall 500,000 3,313
3,313
Machinery 1.2%
Group Maintenance America * 1,250,000 13,359
JLG Industries 750,000 11,953
Teleflex 600,000 18,788
United Rentals * 1,500,000 25,687
69,787
Total Industrial 73,100
21
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
In thousands
BASIC MATERIALS 0.1%
Miscellaneous Materials 0.1%
Energy Conversion Devices * 400,000 $ 3,687
Energy Conversion Devices, Warrants, 7/31/01 * 400,000 775
--------------
Total Basic Materials 4,462
--------------
MISCELLANEOUS 0.7%
Miscellaneous Common Stocks 41,907
--------------
Total Miscellaneous Common Stock 41,907
--------------
Total Common Stocks and Warrants
(Cost $3,392,374) 5,749,714
--------------
SHORT-TERM INVESTMENTS 4.5%
Money Market Funds 4.5%
Reserve Investment Fund, 6.16%, + # 273,853,382 273,853
--------------
Total Short-Term Investments (Cost $273,853) 273,853
--------------
Total Investments in Securities
100.0% of Net Assets (Cost $3,666,227) $ 6,023,567
Other Assets Less Liabilities (1,571)
--------------
NET ASSETS $ 6,021,996
--------------
# Seven-day yield
++ Securities contain some restrictions as to public resale-total of such
securities at period-end amount to 0.0% of net assets.
+ Affiliated company
* Non-income producing
ADR American Depository Receipt
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
December 31, 1999
- -----------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value
Affiliated companies (cost $895,313) $1,037,802
Other companies (cost $2,770,914) 4,985,765
----------
Total investments in securities 6,023,567
Other assets 32,894
----------
Total assets 6,056,461
----------
Liabilities
Total liabilities 34,465
----------
NET ASSETS $6,021,996
----------
Net Assets Consist of:
Accumulated net realized gain/loss - net of distributions $ 197,375
Net unrealized gain (loss) 2,357,340
Paid-in-capital applicable to 218,703,354 shares of
$1.00 par value capital stock outstanding;
300,000,000 shares authorized 3,467,281
----------
NET ASSETS $6,021,996
----------
NET ASSET VALUE PER SHARE $ 27.53
----------
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In thousands
Year
Ended
12/31/99
Investment Income (Loss)
Income
Interest (including $7,379 from affiliated companies) $ 7,379
Dividend 4,337
-----------
Total income 11,716
-----------
Expenses
Investment management 33,020
Shareholder servicing 10,455
Prospectus and shareholder reports 492
Custody and accounting 279
Registration 59
Legal and audit 24
Directors 16
Miscellaneous 29
-----------
Total expenses 44,374
Expenses paid indirectly (56)
-----------
Net expenses 44,318
-----------
Net investment income (loss) (32,602)
-----------
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 764,302
Foreign currency transactions 1
-----------
Net realized gain (loss) 764,303
Change in net unrealized gain or loss on securities 753,938
-----------
Net realized and unrealized gain (loss) 1,518,241
-----------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 1,485,639
-----------
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
Year
Ended
12/31/99 12/31/98
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ (32,602) $ (32,687)
Net realized gain (loss) 764,303 214,659
Change in net unrealized gain or loss 753,938 127,070
Increase (decrease) in net assets from operations 1,485,639 309,042
Distributions to shareholders
Net realized gain (593,298) (270,553)
Capital share transactions *
Shares sold 787,313 1,173,003
Distributions reinvested 571,898 260,068
Shares redeemed (1,458,035) (1,346,820)
Increase (decrease) in net assets from capital
share transactions (98,824) 86,251
Net Assets
Increase (decrease) during period 793,517 124,740
Beginning of period 5,228,479 5,103,739
End of period $ 6,021,996 $ 5,228,479
----------------------------
* Share information
Shares sold 33,180 50,954
Distributions reinvested 23,390 12,419
Shares redeemed (61,913) (58,401)
Increase (decrease) in shares outstanding (5,343) 4,972
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
December 31, 1999
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price New Horizons Fund, Inc. (the fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company and commenced operations on June 3, 1960.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company industry;
these principles may require the use of estimates by fund management.
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 not traded on a particular day and
securities regularly traded in the over-the-counter market are valued at the
mean of the latest bid and asked prices. Other equity securities 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.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
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.
Affiliated Companies As defined by the Investment Company Act of 1940, an
affiliated company is one in which the fund owns at least 5% of the
outstanding voting securities.
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 the 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. Expenses paid indirectly reflect
credits earned on daily uninvested cash balances at the custodian and are used
to reduce the fund's custody charges.
26
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $2,168,180,000 and $2,971,605,000, respectively, for the year ended
December 31, 1999.
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, the following
reclassifications were made during the year ended December 31, 1999. The
results of operations and net assets were not affected by the
increases/(decreases) to these accounts.
------------------------------------------------------------------------------
Undistributed net investment income $ 32,602,000
Undistributed net realized gain (32,602,000)
At December 31, 1999, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled
$3,666,227,000. Net unrealized gain aggregated $2,357,340,000 at period-end,
of which $2,737,750,000 related to appreciated investments and $380,410,000 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 $3,147,000 was payable at December 31, 1999. 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 0.295% for assets in excess of
$120 billion. At December 31, 1999, and for the year then ended, the effective
27
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
annual group fee rate was 0.32%. 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. 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. The fund incurred expenses pursuant to these
related party agreements totaling approximately $7,492,000 for the year ended
December 31, 1999, of which $646,000 was payable at period-end.
Additionally, the fund is one of several T. Rowe Price-sponsored mutual funds
(underlying funds) in which the T. Rowe Price Spectrum Funds (Spectrum) may
invest. Spectrum does not invest in the underlying funds for the purpose of
exercising management or control. Expenses associated with the operation of
Spectrum are borne by each underlying fund to the extent of estimated savings
to it and in proportion to the average daily value of its shares owned by
Spectrum, pursuant to special servicing agreements between and among Spectrum,
the underlying funds, T. Rowe Price, and, in the case of T. Rowe Price
Spectrum International, Rowe Price-Fleming International. Spectrum Growth Fund
held approximately 11.2% of the outstanding shares of the fund at December 31,
1999. For the year then ended, the fund was allocated $1,360,000 of Spectrum
expenses, $133,000 of which was payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve
Funds are offered as cash management options only to mutual funds and other
accounts managed by T. Rowe Price and its affiliates and are not available to
the public. The Reserve Funds pay no investment management fees. Distributions
from the Reserve Funds to the fund for the year ended December 31, 1999,
totaled $7,379,000 and are reflected as interest income in the accompanying
Statement of Operations.
28
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
T. Rowe Price New Horizons 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 New
Horizons Fund, Inc. ("the Fund") at December 31, 1999, and the results of its
operations, the changes in its net assets and financial highlights for each of
the fiscal periods presented, in conformity with accounting principles
generally accepted in the United States. 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, 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, 1999 by correspondence with the custodian, provide
a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 20, 2000
29
<PAGE>
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
- -----------------------------------------------------------
TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 12/31/99
- --------------------------------------------------------------------------------
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:
. $184,669,000 from short-term capital gains,
. $408,629,000 from long-term capital gains, subject to the 20% rate gains
category.
For corporate shareholders, $4,077,000 of the fund's distributed income and
short-term capital gains qualified for the dividends-received deduction.
30
<PAGE>
T. ROWE PRICE SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
INVESTMENT SERVICES AND INFORMATION
Knowledgeable Service Representatives
By Phone 1-800-225-5132 Available Monday through Friday from 8 a.m. to 10 p.m.
ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
Account Services
Checking Available on most fixed income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your
distributions.
Automated 24-Hour Services Including Tele*Access(R)and the T. Rowe Price Web
site on the Internet. Address: www.troweprice.com
Brokerage services*
Individual Investments Stocks, bonds, options, precious metals, and other
securities at a savings over full-service commission rates. **
Investment Information
Combined Statement Overview of all your accounts with T. Rowe Price.
Shareholder Reports Fund managers' reviews of their strategies and results.
T. Rowe Price Report Quarterly investment newsletter discussing markets and
financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment Services,
Inc., Member NASD/SIPC.
** Based on a September 1999 survey for representative-assisted stock trades.
Services vary by firm, and commissions may vary depending on size of
order.
31
<PAGE>
T. ROWE PRICE MUTUAL FUNDS
- --------------------------------------------------------------------------------
STOCK FUNDS BOND FUNDS
Domestic Domestic Taxable
Blue Chip Growth Corporate Income
Capital Appreciation GNMA
Capital Opportunity High Yield
Diversified Small-Cap Growth New Income
Dividend Growth Short-Term Bond
Equity Income Short-Term U.S. Government
Equity Index 500 Spectrum Income
Extended Equity Market Index Summit GNMA
Financial Services Summit Limited-Term Bond
Growth & Income U.S. Treasury Intermediate
Growth Stock U.S. Treasury Long-Term
Health Sciences
Media & Telecommunications Domestic Tax-Free
Mid-Cap Growth
Mid-Cap Value California Tax-Free Bond
New America Growth Florida Intermediate Tax-Free
New Era Georgia Tax-Free Bond
New Horizons* Maryland Short-Term Tax-Free Bond
Real Estate Maryland Tax-Free Bond
Science & Technology New Jersey Tax-Free Bond
Small-Cap Stock New York Tax-Free Bond
Small-Cap Value Summit Municipal Income
Spectrum Growth Summit Municipal Intermediate
Tax-Efficient Growth Tax-Free High Yield
Total Equity Market Index Tax-Free Income
Value Tax-Free Intermediate Bond
Tax-Free Short-Intermediate
International/Global Virginia Short-Term Tax-Free Bond
Virginia Tax-Free Bond
Emerging Markets Stock
European Stock International/Global
Global Stock
International Discovery Emerging Markets Bond
International Growth & Income Global Bond
International Stock International Bond
Japan
Latin America
New Asia
Spectrum International
MONEY MARKET FUNDS+
Taxable
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
Tax-Free
California Tax-Free Money
New York Tax-Free Money
Summit Municipal
Money Market
Tax-Exempt Money
BLENDED ASSET FUNDS
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors.
+ Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in
the funds.
Please call for a prospectus. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
32
<PAGE>
T. ROWE PRICE ADVISORY SERVICES AND RETIREMENT RESOURCES
- --------------------------------------------------------------------------------
ADVISORY SERVICES, RETIREMENT RESOURCES
T. Rowe Price is your full-service retirement specialist. We have developed
unique advisory services that can help you meet the most difficult retirement
challenges. Our broad array of retirement plans is suitable for individuals, the
self-employed, small businesses, corporations, and nonprofit organizations. We
also provide recordkeeping, communications, and investment management services,
and our educational materials, self-help planning guides, and software tools are
recognized as among the industry's best. For information or to request
literature, call us at 1-800-638-5660, or visit our Web site at
www.troweprice.com.
Advisory Services
T. Rowe Price Retirement Income ManagerSM helps retirees or those within two
years of retirement determine how much income they can take in retirement. The
program uses extensive statistical analysis and the input of financial planning
professionals to suggest an income plan that best meets your objectives.
T. Rowe Price Rollover Investment Service offers asset allocation advice to
those planning a major change in their qualified retirement plans, such as a
401(k) rollover from a previous employer or an IRA transfer.
RETIREMENT RESOURCES AT T. ROWE PRICE
Traditional, Roth, and Rollover IRAs
SEP-IRA and SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase Pension and Profit Sharing Plans)
401(k) and 403(b)
457 Deferred Compensation
Planning and Informational Guides
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
Insights Reports
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
Software Packages
T. Rowe Price Retirement Planning
Analyzer(TM) CD-ROM or diskette $19.95.
To order, please call
1-800-541-5760. Also available
on the Internet for $9.95.
T. Rowe Price Variable Annuity Analyzer(TM) CD-ROM or diskette, free. To order,
please call 1-800-469-5304.
T. Rowe Price Immediate Variable Annuity (Income Account)
Investment Kits
We will be happy to send you one of our easy-to-follow investment kits when you
are ready to invest in any T. Rowe Price retirement vehicle, including IRAs,
qualified plans, small-business plans, or our no-load variable annuities.
33
<PAGE>
For fund and account
information or to conduct transactions, 24 hours, 7 days a week By touch-tone
telephone Tele*Access 1-800-638-2587 By Account Access on the Internet
www.troweprice.com/access
For assistance with your existing fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account or obtain information, call:
1-800-638-5660
Internet address:
www.troweprice.com
Plan Account Lines for retirement plan participants:
The appropriate 800 number appears on your retirement account statement.
T. Rowe Price Associates
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 appropriate
to the fund or funds covered in this report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site
Baltimore Area
Downtown
101 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
Boston Area
386 Washington Street
Wellesley
Colorado Springs
4410 ArrowsWest Drive
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
[LOGO OF T. ROWE PRICE]
T. Rowe Price Investment Services, Inc., Distributor. F42-050 12/31/99
