Item 1. Report to Shareholders
T. ROWE PRICE NEW HORIZONS FUND
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Certified Financials
T. ROWE PRICE NEW HORIZONS FUND
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Certified Financials (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
6 Months Year
Ended Ended
6/30/03 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98
NET ASSET VALUE
Beginning of period $ 16.61 $ 22.63 $ 23.89 $ 27.53 $ 23.34 $ 23.30
Investment activities
Net investment
income (loss) (0.07) (0.17) (0.17) (0.13) (0.15) (0.15)
Net realized
and unrealized
gain (loss) 3.82 (5.85) (0.53) (0.37) 7.36 1.46
Total from
investment
activities 3.75 (6.02) (0.70) (0.50) 7.21 1.31
Distributions
Net realized gain - - (0.56) (3.14) (3.02) (1.27)
NET ASSET VALUE
End of period $ 20.36 $ 16.61 $ 22.63 $ 23.89 $ 27.53 $ 23.34
-----------------------------------------------------------
Ratios/Supplemental Data
Total return^ 22.58% (26.60)% (2.84)% (1.86)% 32.52% 6.25%
Ratio of total
expenses to
average net assets 0.95%! 0.92% 0.91% 0.88% 0.90% 0.89%
Ratio of net
investment
income (loss)
to average
net assets (0.80)%! (0.81)% (0.77)% (0.51)% (0.66)% (0.65)%
Portfolio turnover
rate 24.9%! 23.7% 27.4% 47.2% 44.7% 41.2%
Net assets,
end of period
(in millions) $ 4,057 $ 3,359 $ 5,583 $ 6,122 $ 6,022 $ 5,228
^ Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE NEW HORIZONS FUND
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Certified Financials (Unaudited) June 30, 2003
PORTFOLIO OF INVESTMENTS Shares Value
- --------------------------------------------------------------------------------
In thousands
EQUITY INVESTMENTS 97.3% (S.)
CONSUMER DISCRETIONARY 23.0%
Hotels, Restaurants & Leisure 5.9%
Alliance Gaming * 1,500,000 $ 28,365
CEC Entertainment * 750,000 27,697
Extended Stay America * 1,771,000 23,891
Panera Bread, Class A * 200,000 8,000
PF Chang's China Bistro * 1,000,000 49,210
Rare Hospitality International * 664,000 21,700
Ruby Tuesday 1,100,000 27,203
Six Flags * 1,096,600 7,435
Sonic * 700,000 17,801
Station Casinos * 920,200 23,235
Vail Resorts * 350,000 4,714
239,251
Household Durables 3.6%
Harman International 400,000 31,656
Rayovac * 800,000 10,360
Ryland Group 500,000 34,700
Toll Brothers * 1,800,000 50,958
Yankee Candle Company * 800,000 18,576
146,250
Leisure Equipment & Products 0.2%
Polaris Industries 150,000 9,210
9,210
Media 5.8%
ADVO * 800,000 35,520
Catalina Marketing * 2,000,000 35,300
Cox Radio, Class A * 1,000,000 23,110
Entercom Communications * 500,000 24,505
Lamar Advertising, Class A * 350,000 12,324
Radio One * 2,250,000 39,982
Regent Communications * 1,631,700 9,627
Sinclair Broadcast Group, Class A * 506,900 5,885
Spanish Broadcasting, Class A *! 2,000,000 16,300
Westwood One * 900,000 30,537
233,090
Multiline Retail 1.6%
Tuesday Morning *! 2,450,000 $ 64,435
64,435
Specialty Retail 5.7%
AC Moore Arts & Crafts * 700,000 14,021
AnnTaylor Stores * 800,000 23,160
Christopher & Banks *! 1,350,000 49,937
Cole National, Class A *! 858,000 10,742
Genesco * 300,000 5,310
Guitar Center * 83,100 2,410
Linens `n Things * 600,000 14,166
O'Reilly Automotive * 1,800,000 60,102
PETsMART * 100,000 1,667
Sonic Automotive, Class A * 886,000 19,412
The Finish Line, Class A * 575,000 12,771
Tweeter Home Entertainment Group * 1,000,000 8,680
Ultimate Electronics *! 800,000 10,256
232,634
Textiles, Apparel, & Luxury Goods 0.2%
Nautica Enterprises * 600,000 7,698
7,698
Total Consumer Discretionary 932,568
CONSUMER STAPLES 1.3%
Food & Staples Retailing 0.8%
Duane Reade *! 2,100,000 30,975
30,975
Food Products 0.5%
American Italian Pasta, Class A * 204,400 8,513
Delta Pine & Land 600,000 13,188
21,701
Total Consumer Staples 52,676
ENERGY 6.3%
Energy Equipment & Services 4.9%
BJ Services * 400,000 14,944
Cooper Cameron * 425,000 21,411
FMC Technologies * 1,400,000 $ 29,470
Global Industries * 841,000 4,054
Helmerich & Payne 750,000 21,900
Hydril * 531,000 14,470
Key Energy Services * 1,602,700 17,181
Lone Star Technologies * 376,000 7,964
National Oilwell * 400,000 8,800
Seacor Smit * 300,000 10,947
Smith International * 300,000 11,022
Tidewater 700,000 20,559
W-H Energy Services * 784,000 15,272
197,994
Oil & Gas 1.4%
Cimarex Energy * 417,731 9,921
Encore Aquisition * 620,000 11,873
Newfield Exploration * 150,000 5,633
Westport Resources * 743,000 16,903
XTO Energy 600,000 12,066
56,396
Total Energy 254,390
FINANCIALS 5.4%
Capital Markets 2.0%
Affiliated Managers Group * 354,000 21,576
Investor's Financial Services 350,000 10,154
Legg Mason 443,000 28,773
Waddell & Reed Financial, Class A 800,000 20,536
81,039
Commercial Banks 1.2%
Boston Private Financial 350,000 7,378
Silicon Valley Bancshares * 266,000 6,333
UCBH Holdings 1,200,000 34,416
48,127
Insurance 1.1%
Hub International 158,100 2,703
MaxRe Capital 500,000 7,485
Ohio Casualty * 500,000 6,590
Platinum Underwriters 550,000 $ 14,927
Scottish Annuity & Life 700,000 14,147
45,852
Real Estate 0.2%
Trammell Crow * 864,900 9,177
9,177
Thrifts & Mortgage Finance 0.9%
Radian Group 1,000,000 36,650
36,650
Total Financials 220,845
HEALTH CARE 22.2%
Biotechnology 8.3%
Abgenix * 836,300 8,773
Actelion (CHF) * 25,000 1,668
Advanced Medicine, Series D, Pfd., 0% *++@ 513,334 4,620
Affymetrix * 100,000 1,971
Alexion Pharmaceutical * 342,700 5,843
Alkermes * 1,681,700 18,078
Amylin Pharmaceuticals * 600,000 13,134
BioMarin Pharmaceutical * 300,500 2,933
Cephalon * 724,500 29,820
Cubist Pharmaceuticals * 475,000 5,064
CV Therapeutics * 254,800 7,557
Diversa * 690,400 6,787
Exelixis * 1,314,000 9,119
Gilead Sciences * 800,000 44,464
Human Genome Sciences * 450,000 5,724
Imclone Systems * 175,000 5,534
InterMune * 250,000 4,116
Lexicon Genetics * 500,000 3,355
Medarex * 50,000 330
Millennium Pharmaceuticals * 1,400,000 22,022
Myriad Genetics * 119,600 1,628
Neurocrine Biosciences * 965,000 48,192
NPS Pharmaceuticals * 1,260,000 30,668
OSI Pharmaceuticals * 100,000 $ 3,221
Regeneron Pharmaceuticals * 160,000 2,520
Transkaryotic Therapies * 750,000 8,655
Trimeris * 525,000 23,982
Tularik * 500,000 4,970
Vertex Pharmaceuticals * 475,000 6,935
Vicuron Pharmaceuticals * 382,000 5,417
ViroPharma * 509,000 1,323
338,423
Health Care Equipment & Supplies 1.2%
Apogent Technologies * 464,000 9,280
Control Delivery Systems,
Series A, Cv. Pfd., 8.00% *++@ 74,432 3,000
CTI Molecular Imaging * 214,900 4,064
EPIX Medical * 567,000 8,023
Integra LifeServices Holdings * 250,000 6,595
Steris * 100,000 2,309
Viasys Healthcare * 241,000 4,989
Wilson Greatbatch Technologies * 300,000 10,830
49,090
Health Care Providers & Services 11.7%
Accredo Health * 304,500 6,638
AMN Healthcare Services * 250,000 3,175
Community Health System * 1,000,000 19,290
Coventry Health Care * 850,000 39,236
Davita * 2,435,000 65,209
HealthStream *! 2,405,000 6,205
Henry Schein * 2,100,000 109,914
Mid Atlantic Medical Services * 600,000 31,380
Omnicare 3,000,000 101,370
Renal Care Group * 1,250,000 44,012
United Surgical Partners International * 350,000 7,907
VCA Antech * 1,000,000 19,570
WebMD * 750,000 8,122
WellChoice * 357,600 10,471
472,499
Pharmaceuticals 1.0%
Andrx * 250,000 $ 4,975
Atherogenics * 100,000 1,493
Eon Labs * 200,000 7,030
Esperion Therapeutics * 250,000 4,897
Medicines Company * 700,000 13,783
Noven Pharmaceuticals * 375,000 3,840
Salix Pharmaceuticals * 450,000 4,721
40,739
Total Health Care 900,751
INDUSTRIALS & BUSINESS SERVICES 16.3%
Aerospace & Defense 1.0%
Armor Holdings * 775,000 10,385
Mercury Computer Systems * 450,000 8,172
MTC Technologies * 223,000 5,232
Triumph Group * 600,000 16,902
40,691
Air Freight & Logistics 0.5%
C.H. Robinson Worldwide 189,900 6,753
Forward Air * 550,000 13,953
20,706
Commercial Services & Supplies 12.1%
Apollo Group, Class A * 2,150,000 132,784
Bright Horizons Family Solutions * 550,000 18,458
Central Parking 531,000 6,563
Corporate Executive Board * 825,000 33,437
Edison Schools, Class A * 1,000,000 1,500
Education Management * 650,000 34,567
Exult * 4,500,000 38,565
Mobile Mini *! 1,063,800 17,372
Resources Connection * 500,000 11,930
School Specialty *! 1,500,000 42,690
SITEL * 1,759,600 2,728
SOURCECORP * 700,000 15,120
Sylvan Learning Systems * 1,550,000 35,402
Tetra Tech * 1,107,000 18,963
University of Phoenix Online * 1,000,000 $ 50,700
Waste Connections * 900,000 31,545
492,324
Construction & Engineering 0.0%
Comfort Systems USA * 500,000 1,315
1,315
Industrial Conglomerates 0.7%
Roper Industries 742,500 27,621
27,621
Machinery 1.8%
Actuant, Class A *! 600,000 28,392
Nordson 300,000 7,155
Oshkosh Truck, Class B 600,000 35,592
71,139
Trading Companies & Distributors 0.2%
MSC Industrial Direct, Class A * 500,000 8,950
8,950
Total Industrials & Business Services 662,746
INFORMATION TECHNOLOGY 20.9%
Communications Equipment 0.7%
Black Box 177,000 6,407
CIENA * 500,000 2,595
Corvis * 3,000,000 4,500
Harmonic Lightwaves * 875,000 3,561
Packeteer * 550,000 8,564
Turnstone Systems * 1,500,000 3,765
29,392
Computer & Peripherals 0.0%
Synaptics * 100,000 1,346
1,346
Electronic Equipment & Instruments 0.8%
Molex 100,000 2,699
National Instruments * 425,000 16,056
Newport * 750,000 11,100
29,855
Internet Software & Services 2.2%
Autobytel * 400,000 $ 2,496
Autobytel *++@ 1,040,000 5,841
CNET Networks * 3,500,000 21,805
Internet Security Systems * 900,000 13,041
LendingTree * 900,000 22,032
MatrixOne * 1,800,000 10,332
Netegrity * 650,000 3,796
Sonicwall * 753,000 3,614
Websense * 450,000 7,047
Zonafinanciera.com, Series C,
Cv. Pfd., 0% *++!@ 1,190,760 0
90,004
IT Services 5.3%
Affiliated Computer Services, Class A * 750,000 34,298
BISYS Group * 2,750,000 50,517
Certegy * 850,000 23,588
DigitalThink *! 2,214,000 6,974
Global Payments 146,600 5,204
Iron Mountain * 836,300 31,018
Maximus * 600,000 16,578
META Group *! 996,000 4,233
MPS Group * 500,000 3,440
Paychex 100,000 2,931
SkillSoft ADR * 3,000,000 15,150
SRA International, Class A * 198,000 6,336
Tier Technologies, Class B *! 1,750,000 13,563
213,830
Semiconductor & Semiconductor Equipment 5.7%
Altera * 750,000 12,300
Analog Devices * 950,000 33,079
ATMI * 1,050,000 26,219
Cabot Microelectronics * 650,000 32,806
Cognex * 950,000 21,233
Formfactor * 73,000 1,292
Integrated Circuit Systems * 189,800 5,965
Lattice Semiconductor * 2,000,000 16,460
Linear Technology 200,000 6,442
Maxim Integrated Products 1,050,000 35,899
Micrel * 900,000 9,351
MIPS Technologies * 400,000 $ 1,024
MKS Instruments * 400,000 7,228
Semtech * 750,000 10,680
Xilinx * 500,000 12,655
232,633
Software 6.2%
Actuate * 1,900,000 5,282
Autodesk 525,000 8,484
Business Objects ADR * 600,000 13,170
Cadence Design Systems * 275,000 3,317
Concord Communications * 500,000 6,865
Convera, Class A * 700,000 2,786
Factset Research Systems 500,000 22,025
FileNet * 725,000 13,079
Informatica * 2,800,000 19,348
Jack Henry & Associates 1,300,000 23,127
Kronos * 800,000 40,648
Magma Design Automation * 300,000 5,145
Mercury Interactive * 750,000 28,957
Nassda * 575,000 4,439
NetIQ * 1,050,000 16,233
Network Associates * 650,000 8,242
Quest Software * 425,000 5,058
Radiant Systems * 350,000 2,359
Verisity Ltd. *! 1,142,000 13,635
Verity * 300,000 3,798
Wind River Systems * 1,505,000 5,734
251,731
Total Information Technology 848,791
MATERIALS 0.5%
Chemicals 0.5%
Ferro 300,000 6,759
Symyx Technologies * 700,000 11,424
Total Materials 18,183
TELECOMMUNICATION SERVICES 1.4%
Wireless Telecommunication Services 1.4%
Millicom International Cellular * 215,000 $ 5,635
Nextel Partners, Class A * 1,250,000 9,125
NII Holdings, Class B * 593,400 22,709
Triton PCS Holdings, Class A * 1,000,000 5,050
Western Wireless, Class A * 747,500 8,619
Wireless Facilities * 400,000 4,760
Total Telecommunication Services 55,898
Total Equity Investments (Cost $3,194,993) 3,946,848
SHORT-TERM INVESTMENTS 2.7%
Money Market Funds 2.7%
T. Rowe Price Reserve Investment Fund, 1.16% # 111,528,829 111,529
Total Short-Term Investments(Cost $111,529) 111,529
Value
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In thousands
Total Investments in Securities
100.0% of Net Assets (Cost $3,306,522) $ 4,058,377
Other Assets Less Liabilities (1,640)
NET ASSETS $ 4,056,737
-------------
# Seven-day yield
* Non-income producing
(s.) Common stocks, rights, and warrants - cost $3,182,304,000, value
$3,939,228,000, 97.1% of net assets; Preferred stocks - cost $4,620,000,
value $4,620,000, 0.1% of net assets; Convertible preferred stocks - cost
$8,069,000, value $3,000,000, 0.1% of net assets
++ Security contains restrictions as to public resale pursuant to the
Securities Act of 1933 and related rules - total of such securities at
period-end amounts to $13,461,000 and represents 0.3% of net assets
@ Security valued by the Fund's Board of Directors
! Affiliated company - See Note 2.
ADR American Depository Receipts
CHF Swiss franc
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE NEW HORIZONS FUND
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Certified Financials (Unaudited) June 30, 2003
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
In thousands
Assets
Investments in securities, at value
Affiliated companies (cost $318,541) $ 315,709
Other companies (cost $ 2,987,981) 3,742,668
Total investments in securities 4,058,377
Other assets 19,552
Total assets 4,077,929
Liabilities
Total liabilities 21,192
NET ASSETS $ 4,056,737
------------
Net Assets Consist of:
Undistributed net investment income (loss) $ (13,865)
Undistributed net realized gain (loss) (310,938)
Net unrealized gain (loss) 751,855
Paid-in-capital applicable to 199,246,359 shares of
$1.00 par value capital stock outstanding;
300,000,000 shares authorized 3,629,685
NET ASSETS $ 4,056,737
------------
NET ASSET VALUE PER SHARE $ 20.36
------------
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE NEW HORIZONS FUND
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Certified Financials (Unaudited)
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
6/30/03
Investment Income (Loss)
Income
Dividend $ 1,979
Income distributions from mutual funds 385
Total income 2,364
Expenses
Investment management 11,557
Shareholder servicing 4,452
Prospectus and shareholder reports 120
Custody and accounting 117
Registration 27
Legal and audit 11
Directors 11
Total expenses 16,295
Expenses paid indirectly (66)
Net expenses 16,229
Net investment income (loss) (13,865)
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 59,952
Foreign currency transactions (6)
Net realized gain (loss) 59,946
Change in net unrealized gain (loss) on securities 693,412
Net realized and unrealized gain (loss) 753,358
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 739,493
---------
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE NEW HORIZONS FUND
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Certified Financials (Unaudited)
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
6/30/03 12/31/02
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ (13,865) $ (33,401)
Net realized gain (loss) 59,946 104,728
Change in net unrealized gain (loss) 693,412 (1,367,631)
Increase (decrease) in net assets from operations 739,493 (1,296,304)
Capital share transactions *
Shares sold 299,093 657,283
Shares redeemed (341,205) (1,584,308)
Increase (decrease) in net assets from capital
share transactions (42,112) (927,025)
Net Assets
Increase (decrease) during period 697,381 (2,223,329)
Beginning of period 3,359,356 5,582,685
End of period $4,056,737 $ 3,359,356
----------------------------
*Share information
Shares sold 16,837 34,282
Shares redeemed (19,893) (78,724)
Increase (decrease) in shares outstanding (3,056) (44,442)
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE NEW HORIZONS FUND
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Certified Financials (Unaudited) June 30, 2003
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 (the 1940 Act) as a diversified, open-end
management investment company and commenced operations on June 3, 1960. The
fund seeks long-term capital growth by investing primarily in common stocks
of small, rapidly growing companies.
The accompanying financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America,
which require the use of estimates made by fund management.
Valuation
Investments are valued at the close of the New York Stock Exchange (NYSE),
normally 4 p.m. ET, each day that the NYSE is open for business. Equity
securities listed or regularly traded on a securities exchange or in the
over-the-counter market are valued at the last quoted sale price, or
official closing price for certain markets, at the time the valuations are
made. A security that is listed or traded on more than one exchange is
valued at the quotation on the exchange determined to be the primary market
for such security. Listed securities not traded on a particular day are
valued at the mean of the latest bid and ask prices for domestic securities
and the last quoted sale price for international securities.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
Other investments and those for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair
value as determined in good faith by or under the supervision of the
officers of the fund, as authorized by the Board of Directors.
Most foreign markets close before the NYSE. Developments that could affect
the values of securities that occur between the close of a foreign market
and the close of the NYSE normally will not be reflected in security
valuations. However, if such developments are so significant that they
will, in the judgment of the officers of the fund, clearly and materially
affect the value of securities, the previous closing prices may be adjusted
to reflect the fair value of the securities as of the close of the NYSE, as
determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
Currency Translation
Assets, including investments, and liabilities denominated in foreign
currencies are translated into U.S. dollar values each day at the
prevailing exchange rate, using the mean of the bid and ask prices of such
currencies against U.S. dollars as quoted by a major bank. Purchases and
sales of securities, income, and expenses are translated into U.S. dollars
at the prevailing exchange rate on the date of the transaction. The effect
of changes in foreign currency exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains and
losses.
Expenses Paid Indirectly
Certain security trades are directed to brokers who have agreed to rebate a
portion of the related commission to the fund to pay fund expenses.
Additionally, credits earned on temporarily uninvested cash balances at the
custodian are used to reduce the fund's custody charges. Total expenses in
the accompanying statement of operations are presented before reduction for
rebates and credits, which totaled $64,000 and $2,000, respectively, for
the six months ended June 30, 2003.
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.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Affiliated Companies
The fund may invest in certain securities that are considered affiliated
companies. As defined by the 1940 Act, an affiliated company is one in
which the fund owns 5% or more of the outstanding voting securities. At
June 30, 2003, the value of affiliated companies totaled $315,709,000,
representing 7.8% of the value of the fund's investments in securities. For
the six months then ended, $5,339,000 (8.9%) of net realized loss reflected
in the accompanying financial statements resulted from transactions with
affiliated companies.
Other
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $427,385,000 and $551,722,000, respectively, for the
six months ended June 30, 2003.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute to
shareholders all of its taxable income and gains. Federal income tax
regulations differ from generally accepted accounting principles;
therefore, distributions determined in accordance with tax regulations may
differ in amount or character from net investment income and realized gains
for financial reporting purposes. Financial reporting records are adjusted
for permanent book/tax differences to reflect tax character. Temporary
differences are not adjusted. The amount and character of tax-basis
distributions and composition of net assets are finalized at fiscal
year-end; accordingly, tax-basis balances have not been determined as of
June 30, 2003.
For tax purposes, the fund has elected to treat net capital losses realized
between November 1 and December 31 of each year as occurring on the first
day of the following tax year; consequently, $3,528,000 of realized losses
recognized for financial reporting purposes in the year ended December 31,
2002 were recognized for tax purposes on January 1, 2003. Further, the fund
intends to retain realized gains to the extent of available capital loss
carryforwards. As of December 31, 2002, the fund had $367,356,000 of unused
capital loss carryforwards, of which $153,213,000 expire in 2009, and
$214,143,000 expire in 2010.
At June 30, 2003, the cost of investments for federal income tax purposes
was $3,306,522,000. Net unrealized gain aggregated $751,855,000 at
period-end, of which $1,398,976,000 related to appreciated investments and
$647,121,000 related to depreciated investments.
NOTE 4- RELATED PARTY TRANSACTIONS
The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price
Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. The
investment management agreement between the fund and the manager provides
for an annual investment management fee, which is computed daily and paid
monthly. The fee consists of an individual fund fee, equal to 0.35% of the
fund's average daily net assets, and the fund's pro-rata share of a group
fee. The group fee is calculated based on the combined net assets of
certain mutual funds sponsored by Price Associates (the group) applied to a
graduated fee schedule, with rates ranging from 0.48% for the first $1
billion of assets to 0.295% for assets in excess of $120 billion. The
fund's portion of the group fee is determined by the ratio of its net
assets to those of the group. At June 30, 2003, the effective annual group
fee rate was 0.32%, and investment management fee payable totaled
$2,218,000.
In addition, the fund has entered into service agreements with Price
Associates and two wholly owned subsidiaries of Price Associates
(collectively, Price). Price Associates computes the daily share price and
maintains the financial records of the fund. T. Rowe Price Services, Inc.
provides shareholder and administrative services in its capacity as the
fund's transfer and dividend disbursing agent. T. Rowe Price Retirement
Plan Services, Inc. provides subaccounting and recordkeeping services for
certain retirement accounts invested in the fund. Expenses incurred
pursuant to these service agreements totaled $3,247,000 for the six months
ended June 30, 2003, of which $579,000 was payable at period-end.
The fund is also one of several mutual funds sponsored by Price Associates
(underlying Price funds) in which the T. Rowe Price Spectrum Funds
(Spectrum Funds) may invest. The Spectrum Funds do not invest in the
underlying Price funds for the purpose of exercising management or control.
Pursuant to special servicing agreements, expenses associated with the
operation of the Spectrum Funds are borne by each underlying Price fund to
the extent of estimated savings to it and in proportion to the average
daily value of its shares owned by the Spectrum Funds. Expenses allocated
under these agreements are reflected as shareholder servicing expense in
the accompanying financial statements. For the six months ended June 30,
2003, the fund was allocated $458,000 of Spectrum Funds' expenses, of which
$332,000 related to services provided by Price and $22,000 was payable at
period-end. At June 30, 2003, approximately 9.6% of the outstanding shares
of the fund were held by the Spectrum Funds.
The fund may invest in the T. Rowe Price Reserve Investment Fund and T.
Rowe Price Government Reserve Investment Fund (collectively, the Reserve
Funds), open-end management investment companies managed by Price
Associates. The Reserve Funds are offered as cash management options only
to mutual funds, trusts, and other accounts managed by Price Associates
and/or its affiliates, and are not available to the public. The Reserve
Funds pay no investment management fees. Distributions from the Reserve
Funds to the fund for the six months ended June 30, 2003, totaled $385,000.
Item 2. Code of Ethics.
Not required at this time.
Item 3. Audit Committee Financial Expert.
Not required at this time.
Item 4. Principal Accountant Fees and Services.
Not required at this time.
Item 5. Audit Committee of Listed Registrants.
Not required at this time.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. [Reserved]
Item 9. Controls and Procedures
(a) The registrant's principal executive officer and principal financial officer
have evaluated the registrant's disclosure controls and procedures within 90
days of this filing and have concluded that the registrant's disclosure controls
and procedures were effective, as of that date, in ensuring that information
required to be disclosed by the registrant in this Form N-CSR was recorded,
processed, summarized, and reported timely.
(b) The registrant's principal executive officer and principal financial officer
are aware of no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 10. Exhibits.
(a)(1) Not required at this time.
(a)(2) Separate certifications by the registrant's principal executive officer
and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of
1940, are attached.
(b) A certification by the registrant's principal executive officer and
principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940,
is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
T. Rowe Price New Horizons Fund, Inc.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date August 22, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date August 22, 2003
By /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date August 22, 2003