Item 1. Report to Shareholders
DECEMBER 31, 2004
NEW HORIZONS FUND
Annual Report
T. ROWE PRICE
The views and opinions in this report were current as of December 31, 2004. They
are not guarantees of performance or investment results and should not be taken
as investment advice. Investment decisions reflect a variety of factors, and the
managers reserve the right to change their views about individual stocks,
sectors, and the markets at any time. As a result, the views expressed should
not be relied upon as a forecast of the fund's future investment intent. The
report is certified under the Sarbanes-Oxley Act of 2002, which requires mutual
funds and other public companies to affirm that, to the best of their knowledge,
the information in their financial reports is fairly and accurately stated in
all material respects.
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T. ROWE PRICE NEW HORIZONS FUND
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Fellow Shareholders
A strong fourth quarter helped small-cap stocks and your fund provide robust
returns in 2004, surpassing the broad market as measured by the Standard &
Poor's 500 Stock Index. Small-cap stocks outpaced large-caps for the sixth
straight year. Despite concerns over interest rates, inflation, the election,
and conflict in the Middle East, investors ultimately chose to focus on solid
progress in the economy and corporate earnings in driving stock prices higher.
PERFORMANCE COMPARISON
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Periods Ended 12/31/04 6 Months 12 Months
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New Horizons Fund 9.84% 17.90%
Russell 2000 Growth Index 8.16 14.31
Russell 2000 Index 10.83 18.33
Lipper Small-Cap Growth Funds Index 7.12 10.79
S&P 500 Stock Index 7.19 10.88
Your fund's gain of 9.84% for the six-month period was modestly lower than the
broad Russell 2000 Index but exceeded the narrower Russell 2000 Growth Index
benchmark and the Lipper index of small-cap growth funds, as shown in the table.
For the year, your fund's 17.90% return also surpassed all indexes in the table
except the Russell 2000. These results reflected continued market leadership by
value-oriented stocks that are included in the Russell 2000 but are not part of
your fund's investment mandate. In the final quarter, however, growth stocks
edged value as technology and consumer shares were better performers.
Over longer time periods, your fund has also performed well versus the indexes
and its peer funds. As the table on page 11 shows, the fund's 13.23% annualized
return for 10 years ended December 31 surpassed the relevant indexes as well as
its Lipper peer group, and its returns of 4.26% and 17.90% for the five- and
one-year periods, respectively, outpaced all but the Russell 2000.
MARKET ENVIRONMENT
After a lull in June, economic growth resumed during the second half at a more
moderate pace but one that was healthy and above average. Job growth was
positive but continued to lag the overall economy as productivity gains dampened
new hiring. Consumer spending, however, remained at the high levels typical of
the early stages of an economic recovery and was the engine powering overall
growth. Business capital
spending is starting to improve and usually revives in the later stages of the
recovery.
Corporate profits were exceptional in the second half and for the entire year on
higher productivity and lower cost structures. As capital spending picks up,
especially technology spending (the largest component), corporate profits should
receive a second wind. Solid profits helped companies shore up their balance
sheets, which bodes well for capital investment down the road. We were pleased
to see renewed IPO activity in recent months featuring a large number of
offerings of high-quality companies.
The biggest surprise in the financial markets in 2004 was the stability of
interest rates, especially given strong economic growth, a weak dollar, and
federal deficits. Short-term rates rose modestly (especially in the second
half), as the Federal Reserve kept its promise to raise rates at a measured
pace. Long-term rates were largely unchanged and remained historically low,
continuing to benefit financial and homebuilding companies, in particular.
Despite much good news, numerous concerns weighed on investors' minds including
geopolitical uncertainty, especially in Iraq; trade and budget deficits; and
inflation fears stirred by rising commodity prices but largely contained by
productivity gains and the change in Fed policy. Nevertheless, investors were
able to look past these negatives to the economy's positive performance.
Taking a closer look at the stock market, we have to conclude that small-cap
stocks are in the later stages of outperformance versus large-caps, since 2004
was the sixth consecutive year of small-cap predominance and previous cycles
have averaged about five years. Performance in the second half bounced back and
forth, as small-caps underperformed in the third quarter but surged in the
fourth to finish ahead of large-caps in both the six-month and one-year periods.
SMALL-CAP VS. LARGE-CAP STOCK RETURNS
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12/31/90- 12/31/93- 6/30/99-
12/31/93 6/30/99 12/31/04
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Russell 2000 Index 105.58% 91.45% 52.79%
S&P 500 Stock Index 54.56 230.31 -4.12
Small-cap valuations relative to large-caps are no longer at their usual
discounts. Within small-caps, growth stocks edged value stocks in the fourth
quarter, but value stocks maintained a significant advantage in the
second half and for the full year--as they have over the last five years. Given
this performance disparity, valuations of small-cap growth stocks relative to
value stocks are very attractive compared with historical averages. In the early
days of an economic recovery, small-cap growth stocks typically lead the stock
market, but this has not happened in the current economic cycle. As a result,
small-cap growth remains an appealing area of the market.
SMALL-CAP STOCK RETURNS
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Periods Ended 12/31/04 6 Months 12 Months
- --------------------------------------------------------------------------------
Russell 2000 Index 10.83% 18.33%
Russell 2000 Growth Index 8.16 14.31
Russell 2000 Value Index 13.37 22.25
While small-caps may be near the end of their cycle, these cycles often have
ended with significant outperformance and high valuation premiums relative to
large companies. Currently, however, relative valuations of small-caps are in
line with previous cycle peaks, or slightly lower, by most measures. Regardless
of when the small-cap cycle ends, we expect the absolute performance of
small-cap stocks to remain solid as they participate in overall stock market
gains.
PORTFOLIO REVIEW
In a market led by value stocks, the best returns came from the energy,
materials, and financial sectors, which seldom feature growth companies. In
contrast, the technology and consumer sectors, which are often fertile areas for
growth stocks, performed more modestly. Among our best contributors in the
second half were consumer discretionary stocks, industrials and business
services, and financials, while results were mixed in health care and
technology--although the tech sector led the fund and the market in the
fourth-quarter market turnaround. (See the Portfolio Highlights table following
this letter.)
The consumer discretionary sector included two of our top five contributors for
the past six months, homebuilders Toll Brothers and Ryland Group, as home sales
have been surprisingly strong due to low mortgage rates. Other key contributors
were restaurant holdings (PF Chang's China Bistro and Rare Hospitality) and our
media names (Catalina Marketing and XM Satellite Radio). The fund also benefited
from companies leveraged to the improving economy in the industrials and
business services area: machinery stocks Actuant (the fifth-best contributor)
and Oshkosh Truck, as well as services stocks Resources Connection, Waste
Connections, and Mobile Mini.
(Please see the Portfolio of Investments for a complete listing of the fund's
holdings and the amount each represents in the portfolio.)
Though it is typically challenging to find financial companies that meet our
growth expectations, recent additions in this area plus existing holdings were
large contributors to performance in the second half, reflecting strength in the
financial markets. Examples include asset managers Affiliated Managers and Legg
Mason along with trust bank Investors Financial Services. Returns also benefited
from gains in consumer finance holdings First Marblehead and Advance America (an
initial public offering that we purchased in December) as well as niche bank
UCBH.
Performance from our technology stocks was mixed, with both strength and
weakness in our software, IT services, and semiconductor holdings. Software
companies McAfee, Kronos, Macromedia, and Activision contributed, while Red Hat
and Magma Design detracted from performance. McAfee is a leader in the computer
security industry, one of the fastest growing segments in the software market.
Investors shied away from stable-growth IT services holdings at the end of the
year, though RightNow Technologies and Global Payments aided results. Certegy
and Skillsoft were weak following earnings disappointments. Within
semiconductors, Tessera Technologies and Volterra Semiconductor boosted returns,
while long-time positions in Analog Devices, Maxim, and Integrated Circuit were
a drag on results.
In the health care sector, health care services and biotechnology holdings
hampered performance. Service provider Omnicare was the worst performer in the
fund for the six months and the year, and positions in VCA Antech and Accredo
also detracted. Omnicare, the largest provider of pharmaceuticals for nursing
home patients, declined sharply during the third quarter as constraints on
government reimbursement and competition from smaller firms hurt its pricing
power. Although pricing concerns remain, the company possesses one of the most
seasoned management teams in the industry and should be able to leverage its
scale advantages over its competitors despite the difficult government
reimbursement climate. Problems with biotech products were reflected in weak
results for Onyx Pharmaceuticals, NPS Pharmaceuticals, and Neurocrine
Biosciences.
Among other sectors, notable contributors included telecommunications stock NII
Holdings and dialysis provider Davita. Wireless telecommunications services
holdings have been outstanding performers for the fund, and holdings such as NII
Holdings, Nextel Partners, and Western
Wireless are benefiting from strong subscriber growth. While we continue to
expect good operational performance from the sector, we pared back our
relatively large weighting. On the negative side, notable detractors included
Multimedia Games, for-profit educator Apollo Group, and retailer Ann Taylor
Stores. Apollo Group is the fund's largest holding and one of our most dynamic
investments. The stock was weak, along with most education stocks, on regulatory
concerns regarding incentive-based compensation for enrollment counselors. The
situation has since been resolved, and Apollo's sophisticated recruiting effort
remains a competitive advantage. Enrollment growth is strong in the for-profit
education industry, which we continue to view as an attractive investment area.
As you can see in the table, changes in sector weightings were modest in the
second half and the year as a whole, and the sectors composing the top four
remained the same. Most changes in the percentages reflected market fluctuations
rather than major purchases or sales.
SECTOR DIVERSIFICATION
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12/31/03 6/30/04 12/31/04
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Information Technology 21.0% 21.5% 22.1%
Consumer Discretionary 22.4 20.1 20.4
Health Care 22.1 21.1 19.9
Industrials and Business Services 16.5 17.8 17.8
Financials 7.1 8.2 9.2
Energy 5.5 5.2 5.3
Telecommunication Services 3.0 4.2 3.8
Materials 1.0 1.2 1.4
Consumer Staples 0.9 0.3 -
Utilities - - -
Other and Reserves 0.5 0.4 0.1
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Total 100.0% 100.0% 100.0%
Historical weightings reflect current industry/sector classifications.
Based on Net Assets
During the second half, we added to our technology holdings in Internet-related
companies as well as in software and semiconductors. We also took advantage of
specific opportunities in financials, including CapitalSource, Advance America,
and Infinity Property and Casualty. Some of our largest investments were in
gaming equipment maker WMS Industries, Internet stock Sina, video gamer
Activision, biotech Martek Biosciences, and retailer Pantry.
Sales spanned several sectors. In the consumer discretionary area we sold radio
stocks Westwood One and Radio One and restaurants CEC Entertainment and Ruby
Tuesday. We continued to trim holdings in energy equipment and services that had
performed well, and we also pared positions in
health care services and equipment. The largest sales were Western Wireless, CEC
Entertainment, Ruby Tuesday, Catalina Marketing, and Hewitt Associates (a
larger-cap stock received in the Exult acquisition, which likewise was sold).
OUTLOOK
After a long run for small-cap stocks, we think a shift in market leadership
toward large-caps is likely. Large-cap earnings growth has been surprisingly
strong, due in part to continued weakness in the U.S. dollar, which benefits the
earnings of export and multinational companies. The relative earnings strength
of small-cap companies will determine whether
[Graphic Omitted]
NEW HORIZONS FUND P/E RATIO
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Dec-69 28.6
25
17.7
20.4
Dec-70 22.2
29.7
28
27.7
Dec-71 28.6
33.5
33.5
29.7
Dec-72 29.2
22.6
17.9
21.7
Dec-73 16.8
15.7
12.5
8.7
Dec-74 8.7
13.7
15.3
11.7
Dec-75 11.5
12.4
10.7
10.1
Dec-76 10.4
9
8.7
8.6
Dec-77 8.8
8.6
9.5
10.7
Dec-78 8.9
9.6
9
9.8
Dec-79 10.7
9.3
10.4
14.2
Dec-80 16.5
15.7
14.9
11.3
Dec-81 11.5
10.4
10.8
13.1
Dec-82 16.8
19.4
21.5
19.3
Dec-83 17.3
14.4
13.9
13.5
Dec-84 12.4
14.5
15
14
Dec-85 16.1
17.3
17.5
14.6
Dec-86 14.5
18.3
17.9
18.2
Dec-87 12.5
13.9
14.7
12.8
Dec-88 12.5
13
13.8
14.5
Dec-89 14.3
13.4
15
12
Dec-90 13.6
18.3
17.1
17.8
Dec-91 19.8
19.4
16.8
17
Dec-92 19.8
19
19.7
20.9
Dec-93 21.5
20
18.2
18.9
Dec-94 18.2
18.9
20.4
22.8
Dec-95 23.6
24.1
26.2
26.6
Dec-96 26.3
21.4
23.1
27.2
Dec-97 23.6
24.7
24.4
20.6
Dec-98 23.5
20.7
24.4
25.1
Dec-99 28.3
31.9
32.4
32.6
Dec-00 31.1
26.8
31.7
27.9
Dec-01 34.5
33.5
27
21
Dec-02 22.4
21.8
24.8
25
Dec-03 28.1
28.2
25.1
24
Dec-04 26
[Graphic Omitted]
NEW HORIZONS FUND P/E RELATIVE TO THE S&P 500 P/E
- --------------------------------------------------------------------------------
12/69 1.57
1.43
1.27
1.28
12/70 1.31
1.62
1.63
1.63
12/71 1.8
1.99
2.11
1.97
12/72 1.9
1.67
1.46
1.67
12/73 1.47
1.39
1.19
1.13
12/74 1.04
1.25
1.29
1.16
12/75 1.17
1.14
1.03
1.04
12/76 1.07
0.94
1.02
1.05
12/77 1.11
1.18
1.22
1.29
12/78 1.17
1.28
1.18
1.2
12/79 1.32
1.37
1.28
1.63
12/80 1.88
1.89
1.94
1.66
12/81 1.53
1.53
1.54
1.7
12/82 1.89
2.11
2.17
2.05
12/83 1.86
1.6
1.62
1.52
12/84 1.35
1.42
1.35
1.27
12/85 1.3
1.26
1.15
1.05
12/86 1.02
1.1
1.13
1.14
12/87 1.01
1.09
1.2
1.12
12/88 1.14
1.12
1.12
1.08
12/89 1.01
0.99
1.05
0.96
12/90 1.01
1.2
1.17
1.15
12/91 1.19
1.23
1.06
1.06
12/92 1.2
1.14
1.2
1.25
12/93 1.34
1.32
1.26
1.29
12/94 1.37
1.32
1.34
1.44
12/95 1.49
1.48
1.58
1.58
12/96 1.5
1.2
1.2
1.3
12/97 1.2
1.1
1
1
12/98 0.9
0.8
0.9
1
12/99 1
1.2
1.3
1.4
12/00 1.4
1.3
1.4
1.3
12/01 1.5
1.5
1.4
1.3
12/02 1.3
1.4
1.4
1.4
12/03 1.6
1.6
1.5
1.48
12/04 1.5
Note: The fund's P/E ratio is an average, unweighted number based on 12-month
forward earnings per share as estimated by the fund's investment manager at each
quarter-end.
they can continue to outperform their large-cap brethren. Value stocks also have
enjoyed a long leadership run, but we expect investors to focus once again on
companies with prospects for above-average earnings growth. This should be
favorable for small-cap growth stocks, which have lagged within the small-cap
universe.
The New Horizons Fund P/E ratio (using 12-month forward earnings estimates)
relative to that of the S&P 500 Stock Index rose slightly during 2004 to
1.50--near its highest level in the past 20 years. Therefore, it is hard to make
a case that small-cap stocks look cheap relative to larger companies. However,
small growth companies are more attractively valued than their small value
peers, in our view, and we hope they will show better relative performance going
forward. If the market extends its gains, as we believe it will, small-cap
growth stocks and your fund should continue to generate solid returns.
Respectfully submitted,
John H. Laporte
President of the fund and chairman of its Investment Advisory Committee
January 24, 2005
The committee chairman has day-to-day responsibility for managing the portfolio
and works with committee members in developing and executing the fund's
investment program.
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RISKS OF STOCK INVESTING
As with all stock and bond mutual funds, each fund's share price can fall
because of weakness in the stock or bond markets, a particular industry, or
specific holdings. Stock markets can decline for many reasons, including adverse
political or economic developments, 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, the investment manager's assessment of
companies held in a fund may prove incorrect, resulting in losses or poor
performance even in rising markets.
Investing in small companies involves greater risk than is customarily
associated with larger 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. Such companies seldom pay significant
dividends that could cushion returns in a falling market.
GLOSSARY
Lipper indexes: Fund benchmarks that consist of a small number (10 to 30) of the
largest mutual funds in a particular category as tracked by Lipper Inc.
Price/earnings ratio (P/E): A valuation measure calculated by dividing the price
of a stock by its current or projected earnings per share. This ratio gives
investors an idea of how much they are paying for current or future earnings
power.
S&P 500 Stock Index: An unmanaged index that tracks the stocks of 500 primarily
large-cap U.S. companies.
Russell 2000 Index: Consists of the smallest 2,000 companies in the Russell 3000
Index, representing approximately 7% of the Russell 3000's total market
capitalization. Performance is reported on a total return basis.
Russell 2000 Value Index: Market-weighted total return index that measures the
performance of companies within the Russell 2000 Index having lower price/book
value ratios and lower forecasted growth rates.
Russell 2000 Growth Index: Market-weighted total return index that measures the
performance of companies within the Russell 2000 Index having higher price/book
value ratios and higher forecasted growth rates.
T. ROWE PRICE NEW HORIZONS FUND
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PORTFOLIO HIGHLIGHTS
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TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
12/31/04
- --------------------------------------------------------------------------------
Apollo Group 4.6%
Henry Schein 2.5
Toll Brothers 2.2
Davita 2.0
NII Holdings 1.8
- --------------------------------------------------------------------------------
Omnicare 1.8
Oshkosh Truck 1.4
O'Reilly Automotive 1.4
Laureate 1.3
Coventry Health Care 1.2
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Actuant 1.1
Tuesday Morning 1.1
Station Casinos 1.1
Roper Industries 1.1
School Specialty 1.0
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Ryland Group 1.0
PF Chang's China Bistro 1.0
Nextel Partners 1.0
UCBH Holdings 1.0
Kronos 0.9
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Corporate Executive Board 0.9
Radian 0.9
Panera Bread 0.9
WMS Industries 0.9
Neurocrine Biosciences 0.9
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Total 35.0%
Note: Table excludes investments in the T. Rowe Price Reserve Investment Fund.
T. ROWE PRICE NEW HORIZONS FUND
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PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ending 12/31/04
Best Contributors Worst Contributors
- --------------------------------------------------------------------------------
Toll Brothers 24(cents) Omnicare -12(cents)
NII Holdings 15 Multimedia Games 11
Davita 12 Apollo Group 7
Ryland Group 9 AnnTaylor Stores 6
Actuant 8 Red Hat 5
Catalina Marketing 8 Analog Devices 4
PF Chang's China Bistro 8 Maxim Integrated Products 4
F5 Networks 7 Integrated Circuit Systems 3
McAfee 7 SkillSoft 3
Henry Schein 7 ONYX Pharmaceuticals ** 3
- --------------------------------------------------------------------------------
Total 105(cents) Total -58(cents)
12 Months Ended 12/31/04
Best Contributors Worst Contributors
- --------------------------------------------------------------------------------
Toll Brothers 26(cents) Omnicare -8(cents)
NII Holdings 25 NPS Pharmaceuticals 7
Davita 21 Entercom Communications 6
Apollo Group 15 SkillSoft 5
Station Casinos 14 Multimedia Games 5
Laureate 13 Exult ** 4
Oshkosh Truck 10 Cox Radio 4
Actuant 10 Intersil Holding 4
University of Wilson Greatbatch
Phoenix Online 9 Technologies 4
McAfee 9 Magma Design Automation 4
- --------------------------------------------------------------------------------
Total 152(cents) Total -51(cents)
** Position eliminated
T. ROWE PRICE NEW HORIZONS FUND
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GROWTH OF $10,000
- --------------------------------------------------------------------------------
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.
[Graphic Omitted]
NEW HORIZONS FUND
- --------------------------------------------------------------------------------
As of 12/31/04
New Horizons Fund $ 34,643
Russell 2000 Growth Index $ 19,888
Lipper Small-Cap Growth Funds Index $ 26,805
New Horizons Russell 2000 Lipper Small-Cap
Fund Growth Index Growth Funds Index
12/94 $ 10,000 $ 10,000 $ 10,000
12/95 15,544 13,104 13,650
12/96 18,192 14,580 15,977
12/97 19,970 16,468 17,771
12/98 21,218 16,670 17,942
12/99 28,118 23,854 28,917
12/00 27,595 18,503 26,531
12/01 26,811 16,796 23,090
12/02 19,679 11,713 16,712
12/03 29,382 17,399 24,194
12/04 34,643 19,888 26,805
AVERAGE ANNUAL COMPOUND TOTAL RETURN
- --------------------------------------------------------------------------------
This table shows how the fund and its benchmarks would have performed if their
actual (or cumulative) returns for the periods shown had been earned at a
constant rate.
Periods Ended 12/31/04 1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
New Horizons Fund 17.90% 4.26% 13.23%
Russell 2000 Growth Index 14.31 -3.57 7.12
Russell 2000 Index 18.33 6.61 11.54
Lipper Small-Cap Growth Funds Index 10.79 -1.51 10.36
S&P 500 Stock Index 10.88 -2.30 12.07
Current performance may be higher or lower than the quoted past performance,
which cannot guarantee future results. Share price, principal value, and return
will vary, and you may have a gain or loss when you sell your shares. For the
most recent month-end performance information, please visit our Web site
(troweprice.com) or contact a T. Rowe Price representative at 1-800-225-5132.
Average annual total return figures include changes in principal value,
reinvested dividends, and capital gain distributions. Returns do not reflect
taxes that the shareholder may pay on fund distributions or the redemption of
fund shares. When assessing performance, investors should consider both short-
and long-term returns.
T. ROWE PRICE NEW HORIZONS FUND
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FUND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
As a mutual fund shareholder, you may incur two types of costs: (1) transaction
costs such as redemption fees or sales loads and (2) ongoing costs, including
management fees, distribution and service (12b-1) fees, and other fund expenses.
The following example is intended to help you understand your ongoing costs (in
dollars) of investing in the fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 invested at the beginning of the most recent six-month period and held
for the entire period.
Actual Expenses
The first line of the following table ("Actual") provides information about
actual account values and actual expenses. You may use the information in this
line, together with your account balance, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the first line under the heading "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information on the second line of the table ("Hypothetical") is based on
hypothetical account values and expenses derived from the fund's actual expense
ratio and an assumed 5% per year rate of return before expenses (not the fund's
actual return). You may compare the ongoing costs of investing in the fund with
other funds by contrasting this 5% hypothetical example and the 5% hypothetical
examples that appear in the shareholder reports of the other funds. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period.
Note: T. Rowe Price charges an annual small-account maintenance fee of $10,
generally for accounts with less than $2,000 ($500 for UGMA/UTMA). The fee is
waived for any investor whose T. Rowe Price mutual fund accounts total $25,000
or more, accounts employing automatic investing, and IRAs and other retirement
plan accounts that utilize a prototype plan sponsored by T. Rowe Price (although
a separate custodial or administrative fee may apply to such accounts). This fee
is not included in the accompanying table. If you are subject to the fee, keep
it in mind when you are estimating the ongoing expenses of investing in the fund
and when comparing the expenses of this fund with other funds.
You should also be aware that the expenses shown in the table highlight only
your ongoing costs and do not reflect any transaction costs, such as redemption
fees or sales loads. Therefore, the second line of the table is useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. To the extent a fund charges transaction costs,
however, the total cost of owning that fund is higher.
T. Rowe Price New Horizons Fund
- --------------------------------------------------------------------------------
Beginning Ending Expenses Paid
Account Value Account Value During Period*
7/1/04 12/31/04 7/1/04 to 12/31/04
- --------------------------------------------------------------------------------
Actual $1,000.00 $1,098.40 $4.54
Hypothetical (assumes 5%
return before expenses) 1,000.00 1,020.81 4.37
*Expenses are equal to the fund's annualized expense ratio for the six-month
period (0.86%), multiplied by the average account value over the period,
multiplied by the number of days in the most recent fiscal half year (184)
divided by the days in the year (366) to reflect the half-year period.
T. ROWE PRICE NEW HORIZONS FUND
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FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Year
Ended
12/31/04 12/31/03 12/31/02 12/31/01 12/31/00
NET ASSET VALUE
Beginning of period $ 24.80 $ 16.61 $ 22.63 $ 23.89 $ 27.53
Investment activities
Net investment income (loss) (0.18) (0.15) (0.17) (0.17) (0.13)
Net realized and
unrealized gain (loss) 4.62 8.34 (5.85) (0.53) (0.37)
Total from
investment activities 4.44 8.19 (6.02) (0.70) (0.50)
Distributions
Net realized gain - - - (0.56) (3.14)
NET ASSET VALUE
End of period $ 29.24 $ 24.80 $ 16.61 $ 22.63 $ 23.89
------------------------------------------------
Ratios/Supplemental Data
Total return^ 17.90% 49.31% (26.60)% (2.84)% (1.86)%
Ratio of total expenses to
average net assets 0.87% 0.91% 0.92% 0.91% 0.88%
Ratio of net investment
income (loss) to average
net assets (0.67)% (0.75)% (0.81)% (0.77)% (0.51)%
Portfolio turnover rate 25.4% 28.6% 23.7% 27.4% 47.2%
Net assets, end of period
(in millions) $ 5,741 $ 4,955 $ 3,359 $ 5,583 $ 6,122
^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.
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
December 31, 2004
PORTFOLIO OF INVESTMENTS (1) Shares Value
- --------------------------------------------------------------------------------
(Cost and value in $ 000s)
COMMON STOCKS & WARRANTS 99.8%
CONSUMER DISCRETIONARY 20.3%
Hotels, Restaurants & Leisure 5.8%
Great Wolf Resorts * 281,500 6,289
Multimedia Games *! 2,250,000 35,460
Panera Bread, Class A * 1,250,000 50,400
PF Chang's China Bistro * 1,000,000 56,350
Rare Hospitality International * 1,125,000 35,843
Sonic * 1,000,000 30,500
Station Casinos 1,175,000 64,249
Texas Roadhouse, Class A * 77,000 2,275
WMS Industries * 1,500,000 50,310
331,676
Household Durables 3.7%
Ryland Group 1,000,000 57,540
Toll Brothers * 1,800,000 123,498
WCI Communities * 240,000 7,056
Yankee Candle Company * 700,000 23,226
211,320
Internet & Catalog Retail 0.2%
priceline.com * 500,000 11,795
11,795
Media 3.9%
ADVO 1,125,000 40,106
Catalina Marketing 1,100,000 32,593
Cox Radio, Class A * 1,000,000 16,480
Entercom Communications * 1,000,000 35,890
Radio One, Class D * 1,900,000 30,628
Regent Communications * 1,750,000 9,275
Spanish Broadcasting, Class A *! 2,500,000 26,400
TiVo * 800,000 4,696
XM Satellite Radio Holdings, Class A * 850,000 31,977
228,045
Multiline Retail 1.1%
Tuesday Morning *! 2,100,000 64,323
64,323
Specialty Retail 5.6%
AC Moore Arts & Crafts *! 1,000,000 28,810
AnnTaylor Stores * 1,500,000 32,295
Christopher & Banks ! 2,000,000 36,900
Hot Topic * 750,000 12,892
Linens 'n Things * 600,000 14,880
O'Reilly Automotive * 1,800,000 81,090
Pantry * 700,000 21,063
Petco * 1,200,000 47,376
Select Comfort * 250,000 4,485
The Finish Line, Class A ! 2,200,000 40,260
320,051
Total Consumer Discretionary 1,167,210
ENERGY 5.3%
Energy Equipment & Services 4.5%
BJ Services 300,000 13,962
Cooper Cameron * 250,000 13,453
FMC Technologies * 1,500,000 48,300
Grant Prideco * 1,500,000 30,075
Helmerich & Payne 800,000 27,232
Hydril * 531,000 24,166
Key Energy Services * 1,500,000 17,700
National Oilwell * 750,000 26,467
Smith International * 200,000 10,882
Tidewater 500,000 17,805
Varco International * 400,000 11,660
W-H Energy Services * 784,000 17,530
259,232
Oil & Gas 0.8%
Bill Barrett * 136,000 4,351
Cimarex Energy * 550,000 20,845
Encore Acquisition * 620,000 21,644
46,840
Total Energy 306,072
FINANCIALS 9.2%
Capital Markets 3.0%
Affiliated Managers Group * 531,000 35,970
Greenhill 250,000 7,175
Investors Financial Services 900,000 44,982
Legg Mason 525,000 38,461
National Financial Partners 550,000 21,340
Waddell & Reed Financial, Class A 950,000 22,696
170,624
Commercial Banks 1.6%
Boston Private Financial 350,000 9,860
Signature Bank * 83,400 2,699
Silicon Valley Bancshares * 266,000 11,922
Texas Capital Bancshares * 600,000 12,972
UCBH Holdings 1,200,000 54,984
92,437
Consumer Finance 1.0%
Advance America Cash Advance Centers * 918,000 21,022
First Marblehead * 450,000 25,313
Moneygram International 400,000 8,456
54,791
Diversified Financial Services 0.8%
CapitalSource * 1,800,000 46,206
46,206
Insurance 1.7%
Direct General 700,000 22,470
Hilb Rogal and Hobbs 209,600 7,596
Hub International 400,000 7,364
Infinity Property & Casualty 900,000 31,680
MaxRe Capital 750,000 15,997
Scottish Annuity & Life 500,000 12,950
98,057
Thrifts & Mortgage Finance 1.1%
Delta Financial 1,000,000 10,300
Radian 1,000,000 53,240
63,540
Total Financials 525,655
HEALTH CARE 19.9%
Biotechnology 7.1%
Abgenix * 950,000 9,823
Acadia Pharmaceuticals * 700,000 4,739
Alexion Pharmaceutical * 764,000 19,253
Alkermes * 1,700,000 23,953
Amylin Pharmaceuticals * 575,000 13,432
BioCryst Pharmaceuticals * 300,000 1,734
Cephalon * 699,500 35,591
Cubist Pharmaceuticals * 1,000,000 11,830
Cytogen * 400,000 4,608
Cytokinetics * 150,000 1,538
deCode Genetics * 1,600,000 12,496
Diversa * 1,400,000 12,236
Dynavax Technologies * 400,000 3,200
Encysive Pharmaceuticals * 400,000 3,972
EXACT Sciences * 400,000 1,528
Exelixis * 1,350,000 12,825
Eyetech Pharmaceuticals * 300,000 13,650
Human Genome Sciences * 800,000 9,616
Idenix Pharmaceuticals * 375,000 6,431
Incyte Genomics * 275,000 2,747
Keryx Biopharmaceuticals *! 275,000 3,182
Kosan Biosciences * 350,000 2,426
Lexicon Genetics * 1,000,000 7,755
Martek Biosciences * 350,000 17,920
Memory Pharmaceuticals * 500,000 2,659
Momenta Pharmaceuticals * 800,000 5,648
Myogen *! 715,000 5,770
Myogen, Warrants, 9/29/09 *+(euro)! 113,000 31
Myriad Genetics * 1,000,000 22,510
Neurocrine Biosciences * 1,000,000 49,300
NPS Pharmaceuticals * 1,200,000 21,936
Protein Design Labs * 175,000 3,615
Rigel Pharmaceuticals * 400,000 9,768
Senomyx * 1,000,000 8,280
Serologicals * 250,000 5,530
Transkaryotic Therapies * 350,000 8,886
Trimeris * 625,000 8,856
Vertex Pharmaceuticals * 675,000 7,135
Vicuron Pharmaceuticals * 425,000 7,399
ViroPharma * 509,000 1,654
XOMA * 425,000 1,101
406,563
Health Care Equipment & Supplies 1.1%
Advanced Neuromodulation Systems * 150,000 5,919
Analogic 120,000 5,375
Conor Medsystems * 125,000 1,731
CTI Molecular Imaging * 250,000 3,548
Endologix *! 682,500 4,661
EPIX Pharmaceuticals * 450,000 8,059
Integra LifeSciences * 544,100 20,094
Regeneration Technologies * 200,000 2,096
Symmetry Medical * 75,000 1,579
Wilson Greatbatch Technologies * 400,000 8,968
62,030
Health Care Providers & Services 9.8%
Advisory Board * 500,000 18,440
Community Health System * 1,000,000 27,880
Coventry Health Care * 1,275,000 67,677
Davita * 2,850,000 112,661
HealthStream *! 2,405,000 6,445
Henry Schein * 2,100,000 146,244
LabOne * 300,000 9,612
Omnicare 3,000,000 103,860
Symbion * 451,828 9,976
United Surgical Partners International * 350,000 14,595
VCA Antech * 1,600,000 31,360
WellChoice * 300,000 16,020
564,770
Pharmaceuticals 1.9%
Able Laboratories * 700,000 15,925
Atherogenics * 850,000 20,026
Inspire Pharmaceuticals * 1,200,000 20,124
Medicines Company * 1,000,000 28,800
Nektar Therapeutics * 300,000 6,072
Noven Pharmaceuticals * 375,000 6,398
Taro Pharmaceuticals * 210,000 7,146
Theravance * 57,800 1,035
Theravance (IPO restricted shares) *+(euro) 65,000 1,047
Theravance (restricted shares), Series D1 *+(euro) 331,183 5,335
111,908
Total Health Care 1,145,271
INDUSTRIALS & BUSINESS SERVICES 17.8%
Aerospace & Defense 1.9%
Armor Holdings * 775,000 36,440
HEICO, Class A 412,600 7,134
Mercury Computer Systems * 500,000 14,840
MTC Technologies * 200,000 6,714
Triumph Group * 594,100 23,467
United Defense Industries * 435,000 20,554
109,149
Air Freight & Logistics 0.2%
EGL * 300,000 8,967
8,967
Commercial Services & Supplies 11.5%
Apollo Group, Class A * 3,265,270 263,540
Bright Horizons Family Solutions * 270,915 17,544
Charles River Associates * 45,700 2,137
Corporate Executive Board 798,800 53,472
Education Management * 1,400,000 46,214
First Advantage, Class A * 283,700 5,787
Huron Consulting Group * 110,000 2,442
Intersections * 550,000 9,488
Laureate * 1,650,000 72,749
LECG * 400,000 7,460
Mobile Mini ! 1,100,000 36,344
Resources Connection * 498,000 27,046
School Specialty *! 1,500,000 57,840
Tetra Tech * 900,000 15,066
Waste Connections * 1,350,100 46,241
663,370
Industrial Conglomerates 1.1%
Roper Industries 1,000,000 60,770
60,770
Machinery 2.6%
Actuant, Class A *! 1,265,000 65,970
Oshkosh Truck 1,200,000 82,056
148,026
Trading Companies & Distributors 0.5%
Interline Brands * 425,000 7,476
MSC Industrial Direct, Class A 650,000 23,387
30,863
Total Industrials & Business Services 1,021,145
INFORMATION TECHNOLOGY 22.1%
Communications Equipment 1.1%
ADTRAN 800,000 15,312
F5 Networks * 350,000 17,052
Harmonic * 800,000 6,672
Packeteer * 800,000 11,560
Tekelec * 500,000 10,220
60,816
Computers & Peripherals 0.5%
Emulex * 1,550,000 26,102
26,102
Electronic Equipment & Instruments 1.0%
Cogent * 150,000 4,950
Daktronics * 100,000 2,489
Digital Theater Systems * 516,900 10,405
Molex 100,000 3,000
National Instruments 500,000 13,625
Newport * 475,000 6,698
Orbotech * 44,300 938
Trimble Navigation * 550,000 18,172
60,277
Internet Software & Services 1.8%
Autobytel * 1,500,000 9,060
CNET Networks * 1,350,000 15,160
Digital Insight * 1,350,000 24,840
HouseValues * 600,000 9,012
MatrixOne * 1,250,000 8,187
Sina * 850,000 27,251
Sonicwall * 300,000 1,896
The Knot *! 1,350,000 6,818
WebSideStory * 200,000 2,486
104,710
IT Services 2.5%
BISYS Group * 1,300,000 21,385
Certegy 1,250,000 44,412
Global Payments 500,000 29,270
Maximus * 350,000 10,892
META Group ! 386,100 3,784
Paychex 100,000 3,408
RightNow Technologies * 368,800 5,956
SkillSoft ADR * 3,500,000 19,775
SRA International, Class A * 100,000 6,420
145,302
Semiconductor & Semiconductor Equipment 5.9%
Advanced Energy Industries * 800,000 7,304
Altera * 600,000 12,420
AMIS Holdings * 1,424,075 23,526
Analog Devices 750,000 27,690
Atheros Communications * 500,000 5,125
ATMI * 1,084,300 24,429
Cabot Microelectronics * 300,000 12,015
Cognex 250,000 6,975
Credence Systems * 1,000,000 9,150
Cymer * 250,000 7,385
Cypress Semiconductor * 550,000 6,452
Integrated Circuit Systems * 1,200,000 25,104
Intersil Holding, Class A 1,100,000 18,414
Intevac * 720,000 5,443
Lattice Semiconductor * 1,200,000 6,840
Linear Technology 200,000 7,752
Maxim Integrated Products 750,000 31,792
Micrel * 725,000 7,990
Microsemi * 550,000 9,548
MKS Instruments * 600,000 11,130
PDF Solutions * 426,700 6,874
PMC-Sierra * 700,000 7,875
PortalPlayer * 40,000 987
Semtech * 850,000 18,589
Tessera Technologies * 400,000 14,884
Volterra Semiconductor * 283,123 6,273
Xilinx 500,000 14,825
336,791
Software 9.3%
Activision * 1,156,100 23,330
Actuate * 100,000 255
Agile Software *! 3,000,000 24,510
Altiris * 675,000 23,915
Blackbaud * 59,703 874
Business Objects ADR * 350,000 8,869
Cadence Design Systems * 500,000 6,905
Concord Communications * 675,000 7,479
Convera *! 1,500,000 6,990
FactSet Research Systems 500,000 29,220
FileNet * 1,025,000 26,404
Informatica * 3,350,000 27,202
Internet Security Systems * 200,000 4,650
Jack Henry & Associates 1,625,000 32,354
Kronos * 1,050,000 53,686
Macromedia * 1,150,000 35,788
Magma Design Automation * 1,400,000 17,584
McAfee * 1,000,000 28,930
Mercury Interactive * 650,000 29,607
Motive * 754,700 8,588
Nassda * 1,000,000 6,900
NetIQ * 2,100,000 25,641
Open Solutions * 323,600 8,401
Phase Forward * 500,000 4,085
Quest Software * 800,000 12,760
Red Hat * 1,450,000 19,358
RSA Security * 725,000 14,544
Salesforce.com * 500,000 8,470
TALX Corporation 550,000 14,185
THQ * 50,000 1,147
Verisity * 175,000 1,435
Verity * 1,450,000 19,024
533,090
Total Information Technology 1,267,088
MATERIALS 1.4%
Chemicals 0.7%
Airgas 400,000 10,604
Symyx Technologies * 1,000,000 30,080
40,684
Metals & Mining 0.7%
Steel Dynamics 1,000,000 37,880
37,880
Total Materials 78,564
TELECOMMUNICATION SERVICES 3.8%
Diversified Telecommunication Services 0.0%
Arbinet Holdings * 45,000 1,118
Callwave * 95,400 1,473
2,591
Wireless Telecommunication Services 3.8%
Crown Castle International * 1,000,000 16,640
Nextel Partners, Class A * 2,850,000 55,689
NII Holdings, Class B * 2,225,000 105,577
Western Wireless, Class A * 650,000 19,045
Wireless Facilities * 2,000,000 18,880
215,831
Total Telecommunication Services 218,422
Total Miscellaneous Common Stocks (s.) 0.0% 2,161
Total Common Stocks & Warrants (Cost $3,418,405) 5,731,588
CONVERTIBLE PREFERRED STOCKS 0.0%
HEALTH CARE 0.0%
Health Care Equipment & Supplies 0.0%
Control Delivery Systems, Series A *+(euro) 74,432 1,000
Total Convertible Preferred Stocks (Cost $4,000) 1,000
SHORT-TERM INVESTMENTS 1.6%
Money Market Fund 1.6%
T. Rowe Price Reserve Investment Fund, 2.28% #! 89,845,376 89,845
Total Short-Term Investments (Cost $89,845) 89,845
Total Investments in Securities
101.4% of Net Assets (Cost $3,512,250) $5,822,433
----------
(1) Denominated in U.S. dollars unless otherwise noted
# Seven-day yield
* Non-income producing
(s.) The identity of certain securities has been concealed to protect the
fund while it completes a purchase or selling program for the
securities.
(euro) Valued by the T. Rowe Price Valuation Committee, established by the
fund's Board of Directors
ADR American Depository Receipts
- --------------------------------------------------------------------------------
!Affiliated Companies
($000s)
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, or a company which is
under common ownership or control.
Purchase Sales Investment Value
Affiliate Cost Cost Income 12/31/04 12/31/03
- --------------------------------------------------------------------------------
AC Moore Arts & Crafts $ 3,197 $ - $ - $28,810 $ *
Actuant 4,767 627 - 65,970 43,440
Agile Software 27,311 - - 24,510 -
Christopher & Banks - - 320 36,900 39,060
Convera - - - 6,990 4,842
Duane Reade - 57,650 - - 35,532
Endologix 3,477 - - 4,661 -
Health Stream - - - 6,445 6,253
Keryx Biopharmaceuticals 2,750 - - 3,182 -
META Group - 10,228 - 3,784 6,300
Mobile Mini - - - 36,344 21,692
Multimedia Games 11,430 2,820 - 35,460 35,963
Myogen 5,436 - - 5,770 -
Myogen, Warrants 9/29/09 14 - - 31 -
School Specialty - - - 57,840 51,015
Spanish Broadcasting 5,130 - - 26,400 21,000
The Finish Line 8,491 1,499 114 40,260 *
The Knot - - - 6,818 4,921
Tuesday Morning - 7,117 - 64,323 75,625
Ultimate Electronics - 17,453 - - 6,104
T. Rowe Price Reserve
Investment Fund, 2.28% ** ** 578 89,845 12,340
Totals $ 1,012 $544,343 $364,087
-----------------------------
* The issuer was not considered an affiliated company at December 31, 2003.
** Purchase and sale information not shown for cash management funds.
- --------------------------------------------------------------------------------
+Restricted Securities
($000s)
The fund may invest in securities that cannot be offered for public resale
without first being registered under the Securities Act of 1933 and related
rules. The total restricted securities (excluding 144A issues) at period-end
amounts to $7,413 and represents 0.1% of net assets.
Acquisition Acquisition
Description Date Cost
- ------------------------------------------ ----------- -----------
Control Delivery Systems, Series A 8/9/00 $ 4,000
Myogen, Warrants, 9/29/09 2/29/04 14
Theravance (IPO restricted shares) 10/6/04 1,040
Theravance (restricted shares), Series D1 10/6/04 4,620
Totals $ 9,674
------------
The fund has registration rights for certain restricted securities held as of
December 31, 2004. Any costs related to such registration are borne by the
issuer.
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
December 31, 2004
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
(In thousands except shares and per share amounts)
Assets
Investments in securities, at value
Affiliated companies (cost $401,947) $ 544,343
Non-affiliated companies (cost $3,110,303) 5,278,090
Total investments in securities 5,822,433
Other assets 21,179
Total assets 5,843,612
Liabilities
Total liabilities 102,694
NET ASSETS $ 5,740,918
---------------
Net Assets Consist of:
Undistributed net realized gain (loss) $ (48,977)
Net unrealized gain (loss) 2,310,183
Paid-in-capital applicable to 196,360,144 shares of
$1.00 par value capital stock outstanding;
300,000,000 shares authorized 3,479,712
NET ASSETS $ 5,740,918
---------------
NET ASSET VALUE PER SHARE $ 29.24
---------------
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
($ 000s)
Year
Ended
12/31/04
Investment Income (Loss)
Dividend income $ 10,375
Expenses
Investment management 34,850
Shareholder servicing 10,081
Custody and accounting 275
Prospectus and shareholder reports 148
Legal and audit 100
Registration 66
Directors 12
Miscellaneous 45
Total expenses 45,577
Expenses paid indirectly (6)
Net expenses 45,571
Net investment income (loss) (35,196)
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Affiliated securities (35,794)
Non-affiliated securities 242,340
Net realized gain (loss) 206,546
Change in net unrealized gain (loss) on securities 706,297
Net realized and unrealized gain (loss) 912,843
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 877,647
---------------
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
($ 000s)
Year
Ended
12/31/04 12/31/03
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ (35,196) $ (30,379)
Net realized gain (loss) 206,546 115,336
Change in net unrealized gain (loss) 706,297 1,545,443
Increase (decrease) in net assets
from operations 877,647 1,630,400
Capital share transactions *
Shares sold 924,288 794,501
Shares redeemed (1,016,093) (829,181)
Increase (decrease) in net assets from capital
share transactions (91,805) (34,680)
Net Assets
Increase (decrease) during period 785,842 1,595,720
Beginning of period 4,955,076 3,359,356
End of period $ 5,740,918 $ 4,955,076
----------- -----------
(Including undistributed net investment income
of $0 at 12/31/04 and $0 at 12/31/03)
*Share information
Shares sold 35,289 38,617
Shares redeemed (38,713) (41,135)
Increase (decrease) in shares outstanding (3,424) (2,518)
The accompanying notes are an integral part of these financial statements.
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
December 31, 2004
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. The fund 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
The fund values its investments and computes its net asset value per share 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, for certain markets, the official closing price at
the time the valuations are made, except for OTC Bulletin Board securities,
which are valued at the mean of the latest bid and asked prices. 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 asked prices for domestic securities and the last quoted sale price for
international securities.
Investments in mutual funds are valued at the mutual fund's closing net asset
value per share on the day of valuation.
Other investments, including restricted securities, 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 the T. Rowe Price
Valuation Committee, established by the fund's Board of Directors.
Rebates and Credits
Subject to best execution, the fund may direct certain security trades to
brokers who have agreed to rebate a portion of the related brokerage commission
to the fund in cash. Commission rebates are included in realized gain on
securities in the accompanying financial statements and totaled $249,000 for the
year ended December 31, 2004. Additionally, the fund earns credits on
temporarily uninvested cash balances at the custodian that reduce the fund's
custody charges. Custody expense in the accompanying financial statements is
presented before reduction for credits, which are reflected as expenses paid
indirectly.
Investment Transactions, Investment Income, and Distributions
Income and expenses are recorded on the accrual basis. Dividends received from
mutual fund investments are reflected as dividend income; capital gain
distributions are reflected as realized gain/loss. Dividend income and capital
gain distributions are recorded on the ex-dividend date. Investment transactions
are accounted for on the trade date. Realized gains and losses are reported on
the identified cost basis. Distributions to shareholders are recorded on the
ex-dividend date. Income distributions are declared and paid on an annual basis.
Capital gain distributions, if any, are declared and paid by the fund, typically
on an annual basis.
Other
In the normal course of business, the fund enters into contracts that provide
general indemnifications. The fund's maximum exposure under these arrangements
is dependent on claims that may be made against the fund in the future and,
therefore, cannot be estimated; however, based on experience, the risk of
material loss from such claims is considered remote.
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.
Restricted Securities
The fund may invest in securities that are subject to legal or contractual
restrictions on resale. Although certain of these securities may be readily
sold, for example, under Rule 144A, others may be illiquid, and their sale may
involve substantial delays and additional costs, and prompt sale at an
acceptable price may be difficult.
Other
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $1,328,086,000 and $1,431,053,000, respectively, for the year ended
December 31, 2004.
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 under Subchapter M of the
Internal Revenue Code 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 significantly 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. Financial records are not adjusted for temporary differences.
There were no distributions in the year ended December 31, 2004. At December 31,
2004, the tax-basis components of net assets were as follows:
- --------------------------------------------------------------------------------
Unrealized appreciation $ 2,598,060,000
Unrealized depreciation (316,514,000)
Net unrealized appreciation (depreciation) 2,281,546,000
Capital loss carryforwards (20,340,000)
Paid-in capital 3,479,712,000
Net assets $ 5,740,918,000
----------------
Pursuant to federal income tax regulations applicable to investment companies,
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, $28,637,000 of realized losses reflected in the accompanying
financial statements will not be recognized for tax purposes until 2005. The
fund intends to retain realized gains to the extent of available capital loss
carryforwards for federal income tax purposes. During the year ended December
31, 2004, the fund utilized $228,067,000 of capital loss carryforwards. As of
December 31, 2004, the fund had $20,340,000 of capital loss carryforwards that
expire in 2010.
For the year ended December 31, 2004, the fund recorded the following permanent
reclassifications to reflect tax character. Reclassifications to paid-in capital
relate primarily to the current net operating loss. Results of operations and
net assets were not affected by these reclassifications.
- --------------------------------------------------------------------------------
Undistributed net investment income $ 35,196,000
Paid-in capital (35,196,000)
At December 31, 2004, the cost of investments for federal income tax purposes
was $3,540,887,000.
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 average daily net assets to those of the group. At December 31,
2004, the effective annual group fee rate was 0.31%, and investment management
fee payable totaled $3,201,000.
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. For the year ended December 31, 2004, expenses incurred
pursuant to these service agreements were $84,000 for Price Associates,
$1,774,000 for T. Rowe Price Services, Inc., and $5,513,000 for T. Rowe Price
Retirement Plan Services, Inc. At period-end, a total of $620,000 of these
expenses was payable.
Additionally, the fund is one of several mutual funds in which certain college
savings plans managed by Price Associates may invest. As approved by the fund's
Board of Directors, shareholder servicing costs associated with each college
savings plan are borne by the fund in proportion to the average daily value of
its shares owned by the college savings plan. For the year ended December 31,
2004, the fund was charged $28,000 for shareholder servicing costs related to
the college savings plans, of which $20,000 was for services provided by Price
and less than $1,000 was payable at period-end. At December 31, 2004,
approximately 1.1% of the outstanding shares of the fund were held by college
savings plans.
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 a special
servicing agreement, 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 this agreement are reflected as
shareholder servicing expense in the accompanying financial statements. For the
year ended December 31, 2004, the fund was allocated $744,000 of Spectrum Funds'
expenses, of which $537,000 related to services provided by Price and $38,000
was payable at period-end. At December 31, 2004, approximately 6.9% 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 the T. Rowe
Price Government Reserve Investment Fund (collectively, the Reserve Funds),
open-end management investment companies managed by Price Associates and
affiliates of the fund. The Reserve Funds are offered as cash management options
to mutual funds, trusts, and other accounts managed by Price Associates and/or
its affiliates, and are not available for direct purchase by members of the
public. The Reserve Funds pay no investment management fees.
As of December 31, 2004, T. Rowe Price Group, Inc. and/or its wholly owned
subsidiaries owned 188,747 shares of the fund, representing less than 1% of the
fund's net assets.
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
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, 2004, and the results of its operations, the
changes in its net assets and the financial highlights for each of the fiscal
periods presented, in conformity with accounting principles generally accepted
in the United States of America. 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 the auditing standards
of the Public Company Accounting Oversight Board (United States). Those
standards 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, 2004 by
correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 11, 2005
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
INFORMATION ON PROXY VOTING POLICIES, PROCEDURES, AND RECORDS
- --------------------------------------------------------------------------------
A description of the policies and procedures used by T. Rowe Price funds and
portfolios to determine how to vote proxies relating to portfolio securities is
available in each fund's Statement of Additional Information, which you may
request by calling 1-800-225-5132 or by accessing the SEC's Web site,
www.sec.gov. The description of our proxy voting policies and procedures is also
available on our Web site, www.troweprice.com. To access it, click on the words
"Company Info" at the top of our homepage for individual investors. Then, in the
window that appears, click on the "Proxy Voting Policy" navigation button in the
top left corner.
Each fund's most recent annual proxy voting record is available on our Web site
and through the SEC's Web site. To access it through our Web site, follow the
directions above, then click on the words "Proxy Voting Record" at the bottom of
the Proxy Voting Policy page.
HOW TO OBTAIN QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The fund files a complete schedule of portfolio holdings with the Securities and
Exchange Commission for the first and third quarters of each fiscal year on Form
N-Q. The fund's Form N-Q is available electronically on the SEC's Web site
(www.sec.gov); hard copies may be reviewed and copied at the SEC's Public
Reference Room, 450 Fifth St. N.W., Washington, DC 20549. For more information
on the Public Reference Room, call 1-800-SEC-0330.
T. ROWE PRICE NEW HORIZONS FUND
- --------------------------------------------------------------------------------
ABOUT THE FUND'S DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
Your fund is governed by a Board of Directors that meets regularly to review
investments, performance, compliance matters, advisory fees, expenses, and other
business affairs, and is responsible for protecting the interests of
shareholders. The majority of the fund's directors are independent of T. Rowe
Price Associates, Inc. (T. Rowe Price); "inside" directors are officers of T.
Rowe Price. The Board of Directors elects the fund's officers, who are listed in
the final table. The business address of each director and officer is 100 East
Pratt Street, Baltimore, MD 21202. The Statement of Additional Information
includes additional information about the fund directors and is available
without charge by calling a T. Rowe Price representative at 1-800-225-5132
Independent Directors
Name
(Year of Birth) Principal Occupation(s) During Past 5 Years
Year Elected * and Directorships of Other Public Companies
Anthony W. Deering Director, Chairman of the Board, President, and
(1945) Chief Executive Officer, The Rouse Company, real
2001 estate developers; Director, Mercantile Bank
(4/03 to present)
Donald W. Dick, Jr. Principal, EuroCapital Advisors, LLC, an
(1943) acquisition and management advisory firm
1994
David K. Fagin Director, Golden Star Resources Ltd., Canyon
(1938) Resources Corp. (5/00 to present), and Pacific
1988 Rim Mining Corp. (2/02 to present); Chairman and
President, Nye Corp.
Karen N. Horn Managing Director and President, Global Private
(1943) Client Services, Marsh Inc. (1999-2003); Managing
2003 Director and Head of International Private
Banking, Bankers Trust (1996-1999); Director, Eli
Lilly and Company and Georgia Pacific
(5/04 to present)
F. Pierce Linaweaver President, F. Pierce Linaweaver & Associates,
(1934) Inc., consulting environmental and civil engineers
2001
John G. Schreiber Owner/President, Centaur Capital Partners, Inc., a
(1946) real estate investment company; Partner,
2001 Blackstone Real Estate Advisors, L.P.; Director,
AMLI Residential Properties Trust and The Rouse
Company, real estate developers
*Each independent director oversees 112 T. Rowe Price portfolios and serves
until retirement, resignation, or election of a successor.
Inside Directors
Name
(Year of Birth)
Year Elected *
[Number of T. Rowe Price Principal Occupation(s) During Past 5 Years
Portfolios Overseen] and Directorships of Other Public Companies
John H. Laporte, CFA Vice President, T. Rowe Price and T. Rowe Price
(1945) Group, Inc.; President, New Horizons Fund
1988
[15]
James S. Riepe Director and Vice President, T. Rowe Price; Vice
(1943) Chairman of the Board, Director, and Vice
1983 President, T. Rowe Price Group, Inc.; Chairman of
[112] the Board and Director, T. Rowe Price Global Asset
Management Limited, T. Rowe Price Global
Investment Services Limited, T. Rowe Price
Investment Services, Inc., T. Rowe Price
Retirement Plan Services, Inc., and T. Rowe Price
Services, Inc.; Chairman of the Board, Director,
President, and Trust Officer, T. Rowe Price Trust
Company; Director, T. Rowe Price International,
Inc.; Chairman of the Board, New Horizons Fund
*Each inside director serves until retirement, resignation, or election of a
successor.
Officers
Name (Year of Birth)
Title and Fund(s) Served Principal Occupation(s)
Kennard W. Allen (1977) Vice President, T. Rowe Price; formerly
Vice President, New Horizons Fund Equity Research Intern, Tonge Investment
Advisors (to 2000); student, Colby
College (to 2000)
Francisco Alonso (1978) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.
P. Robert Bartolo, CPA (1972) Vice President, T. Rowe Price; formerly
Vice President, New Horizons Fund intern, T. Rowe Price (to 2001)
Brian W.H. Berghuis, CFA (1958) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.
Christopher A. Berrier (1977) Vice President, T. Rowe Price
Vice President, New Horizons Fund
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Stephen V. Booth, CPA (1961) Vice President, T. Rowe Price, T. Rowe
Vice President, New Horizons Fund Price Group, Inc., and T. Rowe Price
Trust Company
Brace C. Brooks, CFA (1967) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.
Christopher W. Carlson (1967) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.
Joseph A. Carrier (1960) Vice President, T. Rowe Price, T. Rowe
Treasurer, New Horizons Fund Price Group, Inc., T. Rowe Price
Investment Services, Inc., and T. Rowe
Price Trust Company
Hugh M. Evans III, CFA (1966) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.
Joseph B. Fath, CPA (1971) Vice President, T. Rowe Price; formerly
Vice President, New Horizons Fund intern, T. Rowe Price (to 2001); Chief
Financial Officer and cofounder,
Broadform, Inc. (to 2000)
Roger L. Fiery III, CPA (1959) Vice President, T. Rowe Price, T. Rowe
Vice President, New Horizons Fund Price Group, Inc., T. Rowe Price
International, Inc., and T. Rowe Price
Trust Company
John R. Gilner (1961) Chief Compliance Officer and Vice
Chief Compliance Officer, President, T. Rowe Price; Vice
New Horizons Fund President, T. Rowe Price Investment
Services, Inc., and T. Rowe Price Group,
Inc.
Gregory S. Golczewski (1966) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Trust Company
Francies W. Hawks (1944) Assistant Vice President, T. Rowe Price
Assistant Vice President,
New Horizons Fund
Henry H. Hopkins (1942) Director and Vice President, T. Rowe
Vice President, New Horizons Fund Price Investment Services, Inc., T. Rowe
Price Services, Inc., and T. Rowe Price
Trust Company; Vice President, T. Rowe
Price, T. Rowe Price Group, Inc.,
T. Rowe Price International, Inc., and
T. Rowe Price Retirement Plan Services,
Inc.
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Kris H. Jenner, M.D., D. Phil. (1962) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.
Patricia B. Lippert (1953) Assistant Vice President, T. Rowe Price
Secretary, New Horizons Fund and T. Rowe Price Investment Services,
Inc.
Jay S. Markowitz, M.D. (1962) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.; formerly
Transplant Surgeon and Assistant
Professor of Surgery, Johns Hopkins
University School of Medicine (to 2001)
Timothy E. Parker (1974) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.; formerly
student, Darden Graduate School,
University of Virginia (to 2001);
Financial Analyst, Robert W. Baird &
Co., Inc. (to 1999)
Charles G. Pepin (1966) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.
Jeffrey Rottinghaus, CPA (1970) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.; formerly
student, the Wharton School, University
of Pennsylvania (to 2001); Information
Technology Consultant, Kelly-Lewey &
Associates (to 1999)
Michael F. Sola, CFA (1969) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.
John F. Wakeman (1962) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.
Julie L. Waples (1970) Vice President, T. Rowe Price
Vice President, New Horizons Fund
R. Candler Young (1971) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.
Wenhua Zhang, CFA, CPA (1970) Vice President, T. Rowe Price and
Vice President, New Horizons Fund T. Rowe Price Group, Inc.; formerly
student, the Wharton School, University
of Pennsylvania (to 2001); Associate,
Swiss Reinsurance Company (to 1999)
Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe
Price International for at least five years.
Item 2. Code of Ethics.
The registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR,
applicable to its principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions. A copy of this code of ethics is filed as an exhibit to this Form
N-CSR. No substantive amendments were approved or waivers were granted to this
code of ethics during the period covered by this report.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Directors/Trustees has determined that Mr. David K.
Fagin qualifies as an audit committee financial expert, as defined in Item 3 of
Form N-CSR. Mr. Fagin is considered independent for purposes of Item 3 of Form
N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) - (d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal accountant were
as follows:
2004 2003
Audit Fees $12,790 $14,823
Audit-Related Fees 1,801 912
Tax Fees 3,468 3,850
All Other Fees - 124
Audit fees include amounts related to the audit of the registrant's annual
financial statements and services normally provided by the accountant in
connection with statutory and regulatory filings. Audit-related fees include
amounts reasonably related to the performance of the audit of the registrant's
financial statements, specifically the issuance of a report on internal
controls. Tax fees include amounts related to tax compliance, tax planning, and
tax advice. Other fees include the registrant's pro-rata share of amounts for
agreed-upon procedures in conjunction with service contract approvals by the
registrant's Board of Directors/Trustees.
(e)(1) The registrant's audit committee has adopted a policy whereby audit and
non-audit services performed by the registrant's principal accountant for the
registrant, its investment adviser, and any entity controlling, controlled by,
or under common control with the investment adviser that provides ongoing
services to the registrant require pre-approval in advance at regularly
scheduled audit committee meetings. If such a service is required between
regularly scheduled audit committee meetings, pre-approval may be authorized by
one audit committee member with ratification at the next scheduled audit
committee meeting. Waiver of pre-approval for audit or non-audit services
requiring fees of a de minimis amount is not permitted.
(2) No services included in (b) - (d) above were approved pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Less than 50 percent of the hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees.
(g) The aggregate fees billed for the most recent fiscal year and the preceding
fiscal year by the registrant's principal accountant for non-audit services
rendered to the registrant, its investment adviser, and any entity controlling,
controlled by, or under common control with the investment adviser that provides
ongoing services to the registrant were $903,000 and $821,000, respectively, and
were less than the aggregate fees billed for those same periods by the
registrant's principal accountant for audit services rendered to the T. Rowe
Price Funds.
(h) All non-audit services rendered in (g) above were pre-approved by the
registrant's audit committee. Accordingly, these services were considered by the
registrant's audit committee in maintaining the principal accountant's
independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Not applicable. The complete schedule of investments is included in Item 1 of
this Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. 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 change in the registrant's internal control over financial
reporting that occurred during the registrant's second fiscal quarter covered by
this report that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is
attached.
(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.
(3) Written solicitation to repurchase securities issued by closed-end
companies: not applicable.
(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 February 18, 2005
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 February 18, 2005
By /s/ Joseph A. Carrier
-----------------------------------
Joseph A. Carrier
Principal Financial Officer
Date February 18, 2005