-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T2BYN/YzykWSuq3cts6BnZY9Ai1eyrRFKkRvrABvaaleEWsDddONNWQjl0l+RH4t NwoyJSkjoIf9K5Pw4hXHYg== 0000773485-02-000003.txt : 20020414 0000773485-02-000003.hdr.sgml : 20020414 ACCESSION NUMBER: 0000773485-02-000003 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE NEW AMERICA GROWTH FUND CENTRAL INDEX KEY: 0000773485 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04358 FILM NUMBER: 02561653 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 4105472000 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE COMMON STOCK FUND DATE OF NAME CHANGE: 19851003 N-30D 1 nag43981.txt T. ROWE PRICE NEW AMERICA GROWTH FUND ANNUAL REPORT NEW AMERICA GROWTH FUND DECEMBER 31, 2001 T. ROWE PRICE REPORT HIGHLIGHTS - ----------------- NEW AMERICA GROWTH FUND - ----------------------- o Despite a strong fourth-quarter rally, stocks finished in negative territory for the second consecutive year. o Your fund posted losses that were in line with the broad market but well ahead of its peer funds for the 6- and 12-month periods ended December 31. o Our focus on businesses with strong recurring revenues helped fund results throughout the year. o We are excited about the growth prospects of our top holdings and are cautiously optimistic that 2002 will end the market's negative return streak. REPORTS ON THE WEB - ------------------ SIGN UP FOR OUR E-MAIL PROGRAM, AND YOU CAN BEGIN TO RECEIVE UPDATED FUND REPORTS AND PROSPECTUSES ONLINE RATHER THAN THROUGH THE MAIL. LOG ON TO YOUR ACCOUNT AT WWW.TROWEPRICE.COM FOR MORE INFORMATION. FELLOW SHAREHOLDERS - ------------------- The past year will certainly go down as one of the most difficult in our country's history--not only did the economy slip into recession, we also suffered our most devastating tragedy on September 11. The terrorist attacks at best delayed a recovery, and potentially drove the economy further into recession. The markets apparently believed that a recovery was merely delayed, and the fourth quarter was extremely strong for most indexes. After declining nearly 22% in a tough third quarter, your fund gained nearly 21% in the fourth quarter. This kind of volatility was present all year, as fund returns either rose or declined by double digits each quarter. PERFORMANCE COMPARISON - ---------------------- Periods Ended 12/31/01 6 Months 12 Months - ------------------------------------------------------------------ New America Growth Fund -5.69% -11.89% .................................................................. S&P 500 Stock Index -5.56 -11.89 .................................................................. Lipper Multi-Cap Growth Funds Average -12.06 -26.00 .................................................................. The New America Growth Fund performed in line with the broad S&P 500 Stock Index, but significantly exceeded the Lipper Multi-Cap Growth Funds Average for both the 6- and 12-month periods ending December 31, 2001. The first and third quarters were decidedly negative, whereas the fund had strong second and fourth quarters. Unfortunately, the negative quarters were larger than the positive and the fund finished down nearly 12% for the year. This marks the second consecutive year of negative returns for both the fund and the S&P 500. While this is certainly disappointing, we were not surprised to see a retrenchment after the S&P 500 had risen for five consecutive years and more than tripled over that period. MARKET ENVIRONMENT - ------------------ The horrifying destruction of the World Trade Center and related terrorist events of September may have been a watershed for the nation's economy. Prior to September 11, the Federal Reserve's persistent efforts to spur growth through interest rate cuts raised hopes that the slowing economy could be reinvigorated. The Fed acted aggressively throughout the year, reducing short-term interest rates 11 times by a total of 475 basis points (100 basis points equal one percentage point), bringing the fed funds target rate to 1.75%--its lowest level in 40 years. In the wake of the attacks, economists generally conceded that the U.S. had slipped into recession. Stocks, already suffering from poor corporate earnings, fell sharply following the attacks but rebounded late in the period as investors began to hope for a turnaround in 2002. GROWTH VS. VALUE - ---------------- Fourth 2001 Performance Quarter Second Half 12 Months - ------------------------------------------------------------------ Russell 1000 Growth Index 15.14% -7.21% -20.42% .................................................................. Russell 1000 Value Index 7.37 -4.39 -5.59 .................................................................. The strong fourth-quarter rally centered on growth stocks, but value outperformed growth for the year, with the Russell 1000 Value Index declining 5.59%, versus a nearly 21% fall for the Russell 1000 Growth Index. As one might expect, the growth index outperformed in the second and fourth quarters, while the value index outperformed in the first and third. In the growth arena, there was not much differentiation between large- and mid-cap stocks. The Russell Midcap Growth Index was basically in line with the larger-cap Russell 1000 Growth Index, with both down just over 20%. However, on the value side, the Russell Midcap Value Index soundly beat the Russell 1000 Value Index, actually rising 2.33% versus a more than 5% decline for the large-cap index. PORTFOLIO REVIEW - ---------------- The market action this past year was in many ways a continuation of trends we saw in 2000. Technology stocks fell sharply as the inventory correction continued and corporate spending remained sluggish. Media stocks, particularly those exposed to advertising, also suffered as many companies pared their ad budgets. Fortunately, we held a sizable weighting in commercial services and supplies companies, which performed considerably better over the last two years. As we've said in previous letters, we strongly prefer companies in growth industries with strong recurring revenues. Each of our top three performers for both the 6- and 12-month periods meets these criteria. The best individual stocks for both periods were in the consulting and services industry within the information technology sector. Longtime holding Affiliated Computer Services, a leader in both IT outsourcing and business process outsourcing, is blessed with a high percentage of recurring revenues. Unlike other tech companies that have to continually resell their products, Affiliated enters each quarter with more than 85% of revenues in hand. The company benefited from strong new business, which gives it high visibility into the next several quarters. In an environment where many technology companies don't have visibility past one month, Affiliated is poised for another strong year. Commercial services and supplies was the top contributing industry for both periods. Two payment processors with strong recurring revenues were standouts. First Data is the world's largest credit card processor and--through its ownership of Western Union--the largest money transfer company. Concord EFS is a major credit card processor that focuses on niche industries, such as supermarket and convenience stores, and is also the largest processor of the faster-growing debit industry. Both companies stand squarely in the middle of the trend away from cash and checks toward electronic payments. Longtime holding Apollo, the largest degree-granting university in the U.S., was another strong performer. The company focuses primarily on working adults, a large niche that has generally not been served well by traditional universities. Buoying Apollo's growth is a fast-growing and very profitable online business. As the online business continues to grow, Apollo should benefit through higher operating margins and faster bottom-line growth. Health care providers and services were solid contributors for both the six months and year, led by Omnicare and Wellpoint Health Networks. Omnicare is the largest pharmaceutical distributor for the long-term care industry. While many nursing home and assisted-living companies have struggled, Omnicare has survived by tightly managing its business and staying away from customers who can't pay. Now that several competitors have failed, Omnicare appears to be in a stronger competitive position. Wellpoint is one of the nation's largest managed health care companies. The company originally operated solely in California, but recently began pursuing a nationwide expansion strategy through acquisitions and start-ups. On the flip side, information technology companies continued to struggle, and IT was the worst sector for both the 6- and 12-month periods. While there are strong signs that the deterioration is over, the snapback has yet to occur. Although stocks rallied in the fourth quarter, it is difficult to know if this was due to better business prospects, or simply because companies met lowered expectations. We suspect it was due to the latter, and as a result we were net sellers of technology into the fourth-quarter rally. We remained significantly underweight in technology compared to most growth indexes, and in line with the less-aggressive S&P 500 Index. The worst performer in the sector over the last six months was Peregrine Systems, which provides software and services that allow companies to better manage their infrastructure. Although we believe that long-term demand will be very strong for Peregrine's products, the company was not able to escape the realities of the recession. Over the year, the worst stock by far was Exodus Communications, which we no longer own. It fell victim to the bursting dot-com bubble as demand for its services was severely hampered, and the company was forced to declare bankruptcy. For the most recent six months, Western Wireless and AOL Time Warner were the worst-performing individual stocks. We own Western Wireless, a large cellular communications company, because of its competitive position--since it provides service in rural areas, it generally has only one or two competitors in each market, compared to five or six competitors in major metropolitan areas. The stock struggled in the back half because much of its revenue growth comes from PCS customers of Sprint and AT&T who roam on Western's network. After September 11, decreased travel led to less roaming revenue. AOL Time Warner resulted from the merger of America Online and the cable networks and media properties of Time Warner. We are very excited about the prospects for this company, but it could not escape the slowdown in ad spending. Changes in sector weightings in the last six months reflected both the investment performance of the various sectors as well as some selective moves. We were net buyers of health care stocks and net sellers of IT and consumer discretionary stocks. Within health care, most purchases were made in services and pharmaceuticals. Within services, we bought Anthem, a managed-care company, and HCA-Healthcare, a large hospital corporation. We also added two pharmaceutical companies, Merck and Schering-Plough. Pharmaceutical stock performance was somewhat spotty last year, as we appear to be in a period of limited new blockbuster products. However, valuations have become compelling, and we believe that 2003 and beyond will bring many new exciting products. SECTOR DIVERSIFICATION - ---------------------- 12/31/00 6/30/01 12/31/01 -------- ------- -------- Energy and Utilities 3% 3% 4% Industrials, Business Services, and Materials 13 11 12 Consumer 24 25 24 Health Care 9 12 15 Financials 12 11 11 Information Technology 28 26 23 Telecommunication Services 7 5 4 Reserves and Other 4 7 7 - ---------------------------------------------------------------- Total 100% 100% 100% Semiconductor companies were top performers in the fourth quarter, rising nearly 40% as a group. While we strongly believe in the long-term fortunes of the semiconductor industry, we trimmed several holdings as we felt that valuations became stretched. We would expect to buy many of them back if valuations improve or business strengthens more than we currently expect. Furthermore, although consumers have been very resilient throughout the recession, we felt it prudent to trim our overweight position in retailers. OUTLOOK - ------- We appear to be near the end of the inventory correction and should begin to see some of the effects of the Fed's interest rate cuts. Additionally, the technology sell-off has taken some of the excesses out of the sector, which should help put some wind at our backs. It is in this kind of environment that growth stocks typically perform well. It's not all clear sailing ahead, however. Even though the economic climate should improve, many growth sectors still appear overvalued. While it is important not to value growth stocks based on trough earnings, it appears that some stock prices are discounting a very steep earnings recovery, particularly in technology. We will continue to tread carefully, looking for stocks we believe can generate earnings and cash flow sufficient to justify current valuations. Given what we see today, it is likely that we will remain underweighted in IT in the near term and look for better entry points to increase the weighting. Fortunately, we see other areas that appear to offer strong growth prospects at reasonable valuations. Many service companies are generating strong recurring revenues and cash flows and their stocks sell at reasonably attractive prices. This is where the New America Growth Fund will continue to focus. We are very excited about the growth prospects of our top holdings and are cautiously optimistic that 2002 will end the market's two-year negative return streak. Respectfully submitted, /s/ Marc L. Baylin President of the fund and chairman of its Investment Advisory Committee January 20, 2002 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. T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- PORTFOLIO HIGHLIGHTS - -------------------- TWENTY-FIVE LARGEST HOLDINGS - ---------------------------- Percent of Net Assets 12/31/01 - ------------------------------------------------------------------------ First Data 3.5% Affiliated Computer Services 2.9 Freddie Mac 2.7 Liberty Media 2.7 Waddell & Reed Financial 2.5 ........................................................................ Concord EFS 2.5 Target 2.3 Home Depot 2.3 Apollo 2.3 Viacom 2.2 ........................................................................ Pfizer 2.2 Flextronics 2.0 Clear Channel Communications 1.9 Microsoft 1.9 Family Dollar Stores 1.9 ........................................................................ Omnicare 1.8 Laboratory Corporation of America 1.8 Western Wireless 1.7 AOL Time Warner 1.6 Costco Wholesale 1.6 ........................................................................ Wellpoint Health Networks 1.5 TMP Worldwide 1.5 Comcast 1.4 Crown Castle 1.4 Vodafone 1.3 ........................................................................ Total 51.4% Note: Table excludes reserves. T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- PORTFOLIO HIGHLIGHTS - -------------------- CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE - -------------------------------------------------------- 6 Months Ended 12/31/01 TEN BEST CONTRIBUTORS - --------------------- Affiliated Computer Services 35(cent) First Data 20 Concord EFS 18 Target 11 Family Dollar Stores 10 Omnicare 10 Wellpoint Health Networks 9 Home Depot 7 Apollo 6 Maxim Integrated Products 6 ........................................................ Total 132(cent) TEN WORST CONTRIBUTORS - ---------------------- Western Wireless -26(cent) AOL Time Warner 26 Liberty Media 20 TMP Worldwide 18 Peregrine Systems 17 Allegiance Telecom 16 VeriSign 16 Crown Castle 15 Providian Financial ** 15 Clear Channel Communications 14 ........................................................ Total -183(cent) 12 Months Ended 12/31/01 TEN BEST CONTRIBUTORS - --------------------- Affiliated Computer Services 52(cent) First Data 39 Concord EFS 31 Family Dollar Stores 29 Apollo 25 Microsoft 21 Target 14 Wellpoint Health Networks * 11 SunGard Data Systems 11 TJX 10 ........................................................ Total 243(cent) TEN WORST CONTRIBUTORS - ---------------------- Exodus Communications ** -88(cent) JDS Uniphase 46 Macromedia ** 46 Crown Castle 34 Cisco Systems 32 Allegiance Telecom 28 Nextel Communications 24 EMC 23 Schlumberger 22 Morgan Stanley Dean Witter 21 ........................................................ Total -364(cent) * Position added ** Position eliminated T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- PERFORMANCE COMPARISON - ---------------------- This chart shows the value of a hypothetical $10,000 investment in the fund over the past 10 fiscal year periods or since inception (for funds lacking 10-year records). The result is compared with benchmarks, which may include a broad-based market index and a peer group average or index. Market indexes do not include expenses, which are deducted from fund returns as well as mutual fund averages and indexes. The following table was depicted as a graph in the printed material. S&P 500 Lipper Multi-Cap Stock Index Growth Funds Average New America Growth Fund ----------- -------------------- ----------------------- 12/31/1991 10000 10000 10000 12/31/1992 10762 10728 10989 12/31/1993 11847 12218 12906 12/31/1994 12003 11893 11947 12/31/1995 16514 16023 17241 12/31/1996 20305 18667 20690 12/31/1997 27080 22298 25055 12/31/1998 34819 27201 29538 12/31/1999 42145 43119 33306 12/31/2000 38307 38494 29799 12/31/2001 33754 28896 26256 AVERAGE ANNUAL COMPOUND TOTAL RETURN - ------------------------------------ This table shows how the fund would have performed each year if its actual (or cumulative) returns for the periods shown had been earned at a constant rate. Periods Ended 12/31/01 1 Year 3 Years 5 Years 10 Years - -------------------------------------------------------------------------- New America Growth Fund -11.89% -3.85% 4.88% 10.13% .......................................................................... Investment return and principal value represent past performance and will vary. Shares may be worth more or less at redemption than at original purchase. Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- For a share outstanding throughout each period FINANCIAL HIGHLIGHTS - -------------------- Year Ended 12/31/01 12/31/00 12/31/99 12/31/98 12/31/97 NET ASSET VALUE Beginning of period $ 35.77 $ 48.06 $ 47.79 $ 44.19 $ 38.37 Investment activities Net investment income (loss) (0.12) (0.14) (0.20) (0.21) (0.13) Net realized and unrealized gain (loss) (4.14) (4.63) 5.87 7.65 8.15 Total from investment activities (4.26) (4.77) 5.67 7.44 8.02 Distributions Net realized gain (0.64) (7.52) (5.40) (3.84) (2.20) NET ASSET VALUE End of period $ 30.87 $ 35.77 $ 48.06 $ 47.79 $ 44.19 RATIOS/SUPPLEMENTAL DATA - ------------------------ Total return* (11.89)% (10.53)% 12.76% 17.89% 21.10% Ratio of total expenses to average net assets 0.99% 0.93% 0.94% 0.95% 0.96% Ratio of net investment income (loss) to average net assets (0.36)% (0.33)% (0.43)% (0.49)% (0.34)% Portfolio turnover rate 52.1% 81.4% 39.7% 45.6% 43.2% Net assets, end of period (in millions) $ 1,183 $ 1,519 $ 2,064 $ 2,064 $ 1,758 * 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 AMERICA GROWTH FUND - ------------------------------------- December 31, 2001 STATEMENT OF NET ASSETS - ----------------------- Shares Value COMMON Stocks 93.0% CONSUMER DISCRETIONARY 23.0% Hotels, Restaurants & Leisure 1.3% Outback Steakhouse * 260,000 $ 8,905 - ------------------------------------------------------------------------------- Starbucks * 350,000 6,669 - ------------------------------------------------------------------------------- 15,574 - ------------------------------------------------------------------------------- Media 12.9% AOL Time Warner * 600,000 19,260 - ------------------------------------------------------------------------------- Catalina Marketing * 240,000 8,328 - ------------------------------------------------------------------------------- Charter Communications (Class A) * 430,000 7,067 - ------------------------------------------------------------------------------- Clear Channel Communications * 450,000 22,910 - ------------------------------------------------------------------------------- Comcast (Class A Special) * 475,000 17,102 - ------------------------------------------------------------------------------- Lamar Advertising (Class A) * 70,000 2,960 - ------------------------------------------------------------------------------- Liberty Media (Series A) * 2,250,000 31,500 - ------------------------------------------------------------------------------- TMP Worldwide * 415,000 17,806 - ------------------------------------------------------------------------------- Viacom (Class B) * 592,000 26,137 - ------------------------------------------------------------------------------- 153,070 - ------------------------------------------------------------------------------- Multiline Retail 5.8% Costco Wholesale * 415,000 18,422 - ------------------------------------------------------------------------------- Family Dollar Stores 745,000 22,335 - ------------------------------------------------------------------------------- Target 665,000 27,298 - ------------------------------------------------------------------------------- 68,055 - ------------------------------------------------------------------------------- Specialty Retail 3.0% Home Depot 530,000 27,035 - ------------------------------------------------------------------------------- TJX 220,000 8,769 - ------------------------------------------------------------------------------- 35,804 - ------------------------------------------------------------------------------- Total Consumer Discretionary 272,503 - ------------------------------------------------------------------------------- CONSUMER STAPLES 1.0% Food & Drug Retailing 1.0% Safeway * 275,000 11,481 - ------------------------------------------------------------------------------- Total Consumer Staples 11,481 - ------------------------------------------------------------------------------- ENERGY 3.3% Energy Equipment & Services 3.3% Baker Hughes 275,000 $ 10,029 - ------------------------------------------------------------------------------- Diamond Offshore Drilling 370,000 11,248 - ------------------------------------------------------------------------------- Schlumberger 120,000 6,594 - ------------------------------------------------------------------------------- Smith * 215,000 11,529 - ------------------------------------------------------------------------------- Total Energy 39,400 - ------------------------------------------------------------------------------- FINANCIALS 10.9% Diversified Financials 9.3% AMBAC 115,000 6,654 - ------------------------------------------------------------------------------- Charles Schwab 265,000 4,100 - ------------------------------------------------------------------------------- Citigroup 240,000 12,115 - ------------------------------------------------------------------------------- Freddie Mac 490,000 32,046 - ------------------------------------------------------------------------------- Goldman Sachs 135,000 12,521 - ------------------------------------------------------------------------------- Morgan Stanley Dean Witter 215,000 12,027 - ------------------------------------------------------------------------------- Waddell & Reed Financial (Class A) 925,000 29,785 - ------------------------------------------------------------------------------- 109,248 - ------------------------------------------------------------------------------- Insurance 1.6% American 165,000 13,101 - ------------------------------------------------------------------------------- Marsh & McLennan 55,000 5,910 - ------------------------------------------------------------------------------- 19,011 - ------------------------------------------------------------------------------- Total Financials 128,259 - ------------------------------------------------------------------------------- HEALTH CARE 15.5% Biotechnology 3.5% Abgenix * 230,000 7,738 - ------------------------------------------------------------------------------- Amgen * 136,000 7,675 - ------------------------------------------------------------------------------- Cephalon * 80,000 6,047 - ------------------------------------------------------------------------------- Genentech * 115,000 6,239 - ------------------------------------------------------------------------------- MedImmune * 300,000 13,899 - ------------------------------------------------------------------------------- 41,598 - ------------------------------------------------------------------------------- Health Care Equipment & Supplies 0.3% Waters Corporation * 90,000 3,488 - ------------------------------------------------------------------------------- 3,488 - ------------------------------------------------------------------------------- Health Care Providers & Services 5.9% Anthem * 100,000 $4,950 - ------------------------------------------------------------------------------- HCA-Healthcare 85,000 3,276 - ------------------------------------------------------------------------------- Laboratory Corporation of America * 265,000 21,425 - ------------------------------------------------------------------------------- Omnicare 870,000 21,645 - ------------------------------------------------------------------------------- Wellpoint Health Networks * 155,000 18,112 - ------------------------------------------------------------------------------- 69,408 - ------------------------------------------------------------------------------- Pharmaceuticals 5.8% Allergan 120,000 9,006 - ------------------------------------------------------------------------------- American Home Products 225,000 13,806 - ------------------------------------------------------------------------------- Eli Lilly 50,000 3,927 - ------------------------------------------------------------------------------- King Pharmaceuticals * 143,033 6,026 - ------------------------------------------------------------------------------- Merck 80,000 4,704 - ------------------------------------------------------------------------------- Pfizer 645,000 25,703 - ------------------------------------------------------------------------------- Schering-Plough 165,000 5,909 - ------------------------------------------------------------------------------- 69,081 - ------------------------------------------------------------------------------- Total Health Care 183,575 - ------------------------------------------------------------------------------- INDUSTRIALS & BUSINESS SERVICES 11.3% Air Freight & Couriers 0.2% Expeditors International of Washington 42,500 2,421 - ------------------------------------------------------------------------------- 2,421 - ------------------------------------------------------------------------------- Commercial Services & Supplies 9.8% Apollo (Class A) * 600,000 27,009 - ------------------------------------------------------------------------------- Choicepoint * 130,000 6,590 - ------------------------------------------------------------------------------- Concord EFS * 900,000 29,506 - ------------------------------------------------------------------------------- First Data 525,000 41,186 - ------------------------------------------------------------------------------- Paychex 60,000 2,091 - ------------------------------------------------------------------------------- Robert Half * 205,000 5,473 - ------------------------------------------------------------------------------- Viad 185,000 4,381 - ------------------------------------------------------------------------------- 116,236 - ------------------------------------------------------------------------------- Industrial Conglomerates 1.3% GE 375,000 15,030 - ------------------------------------------------------------------------------- 15,030 - ------------------------------------------------------------------------------- Total Industrials & Business Services 133,687 - ------------------------------------------------------------------------------- INFORMATION TECHNOLOGY 22.5% Communications Equipment 4.3% Brocade Communications Systems * 125,000 $ 4,141 - ------------------------------------------------------------------------------- Cisco Systems * 830,000 15,035 - ------------------------------------------------------------------------------- Crown Castle * 1,600,000 17,088 - ------------------------------------------------------------------------------- JDS Uniphase * 620,000 5,379 - ------------------------------------------------------------------------------- Juniper Networks * 95,000 1,801 - ------------------------------------------------------------------------------- Nokia ADR 205,000 5,029 - ------------------------------------------------------------------------------- QUALCOMM * 45,000 2,271 - ------------------------------------------------------------------------------- 50,744 - ------------------------------------------------------------------------------- Computers & Peripherals 0.2% EMC * 200,000 2,688 - ------------------------------------------------------------------------------- 2,688 - ------------------------------------------------------------------------------- Electronic Equipment & Instruments 2.5% Flextronics * 1,000,000 23,995 - ------------------------------------------------------------------------------- Jabil Circuit * 270,000 6,134 - ------------------------------------------------------------------------------- 30,129 - ------------------------------------------------------------------------------- Internet Software & Services 1.1% Internet Security Systems * 65,000 2,085 - ------------------------------------------------------------------------------- VeriSign * 276,150 10,512 - ------------------------------------------------------------------------------- 12,597 - ------------------------------------------------------------------------------- IT Consulting & Services 4.2% Affiliated Computer Services (Class A) * 320,000 33,962 - ------------------------------------------------------------------------------- SmartForce ADR * 220,000 5,455 - ------------------------------------------------------------------------------- SunGard Data Systems * 350,000 10,125 - ------------------------------------------------------------------------------- 49,542 - ------------------------------------------------------------------------------- Semiconductor Equipment & Products 4.1% Agere Systems (Class A) * 950,000 5,406 - ------------------------------------------------------------------------------- Analog Devices * 285,000 12,651 - ------------------------------------------------------------------------------- Applied Materials * 185,000 7,419 - ------------------------------------------------------------------------------- Maxim Integrated Products * 205,000 10,764 - ------------------------------------------------------------------------------- Texas Instruments 160,000 4,480 - ------------------------------------------------------------------------------- Xilinx * 195,000 7,613 - ------------------------------------------------------------------------------- 48,333 - ------------------------------------------------------------------------------- Software 6.1% Adobe Systems 75,000 $ 2,330 - ------------------------------------------------------------------------------- Amdocs * 200,000 6,794 - ------------------------------------------------------------------------------- Electronic Arts * 125,000 7,494 - ------------------------------------------------------------------------------- Mercury Interactive * 165,000 5,607 - ------------------------------------------------------------------------------- Microsoft * 340,000 22,527 - ------------------------------------------------------------------------------- Oracle * 390,000 5,388 - ------------------------------------------------------------------------------- Peregrine Systems * 525,000 7,783 - ------------------------------------------------------------------------------- Siebel Systems * 245,000 6,858 - ------------------------------------------------------------------------------- VERITAS Software * 175,000 7,846 - ------------------------------------------------------------------------------- 72,627 - ------------------------------------------------------------------------------- Total Information Technology 266,660 - ------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES 4.1% Diversified Telecommunication Services 0.6% Allegiance Telecom * 850,000 7,068 - ------------------------------------------------------------------------------- 7,068 - ------------------------------------------------------------------------------- Wireless Telecommunication Services 3.5% Nextel Communications (Class A)* 467,500 5,121 - ------------------------------------------------------------------------------- Vodafone ADR 615,000 15,793 - ------------------------------------------------------------------------------- Western Wireless (Class A) * 719,300 20,324 - ------------------------------------------------------------------------------- 41,238 - ------------------------------------------------------------------------------- Total Telecommunication Services 48,306 - ------------------------------------------------------------------------------- Total Miscellaneous Common Stocks 1.4% 16,896 - ------------------------------------------------------------------------------- Total Common Stocks (Cost $859,583) 1,100,767 SHORT-TERM INVESTMENTS 7.7% Money Market Fund 7.7% T. Rowe Price Reserve Investment Fund, 2.43%# 90,565,869 90,566 - ------------------------------------------------------------------------------- Total Short-Term Investments (Cost $90,566) 90,566 Total Investments in Securities 100.7% of Net Assets (Cost $950,149) $ 1,191,333 Other Assets Less Liabilities (8,050) NET ASSETS $ 1,183,283 Net Assets Consist of: Undistributed net realized gain (loss) $ (77,637) Net unrealized gain (loss) 241,184 Paid-in-capital applicable to 38,328,144 shares of no par value capital stock outstanding; unlimited shares authorized 1,019,736 NET ASSETS $ 1,183,283 NET ASSET VALUE PER SHARE $ 30.87 # Seven-day yield * Non-income producing ADR American Depository Receipts The accompanying notes are an integral part of these financial statements. T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- STATEMENT OF OPERATIONS In thousands Year Ended 12/31/01 Investment Income (Loss) Income Dividend $ 4,420 Interest 3,623 Total income 8,043 Expenses Investment management 8,612 Shareholder servicing 3,775 Custody and accounting 130 Prospectus and shareholder reports 106 Registration 40 Directors 13 Legal and audit 12 Proxy and annual meeting 6 Miscellaneous 10 Total expenses 12,704 Expenses paid indirectly (3) Net expenses 12,701 Net investment income (loss) (4,658) Realized and Unrealized Gain (Loss) Net realized gain or loss on securities (77,344) Change in net unrealized gain or loss on securities (104,718) Net realized and unrealized gain (loss) (182,062) INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (186,720) The accompanying notes are an integral part of these financial statements. T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- STATEMENT OF CHANGES IN NET ASSETS In thousands Year Ended 12/31/01 12/31/00 Increase (Decrease) in Net Assets Operations Net investment income (loss) $ (4,658) $ (5,890) Net realized gain (loss) (77,344) 211,881 Change in net unrealized gain (loss) (104,718) (401,065) Increase (decrease) in net assets from operations (186,720) (195,074) Distributions to shareholders Net realized gain (24,211) (275,972) Capital share transactions * Shares sold 165,212 279,986 Distributions reinvested 23,540 267,337 Shares redeemed (313,336) (620,989) Increase (decrease) in net assets from capital share transactions (124,584) (73,666) Net Assets Increase (decrease) during period (335,515) (544,712) Beginning of period 1,518,798 2,063,510 End of period $ 1,183,283 $ 1,518,798 *Share information Shares sold 5,149 6,074 Distributions reinvested 771 7,184 Shares redeemed (10,054) (13,733) Increase (decrease) in shares outstanding (4,134) (475) The accompanying notes are an integral part of these financial statements. T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- December 31, 2001 NOTES TO FINANCIAL STATEMENTS - ----------------------------- NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES - ---------------------------------------- T. Rowe Price New America Growth Fund, Inc. (the fund) is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company and commenced operations on September 30, 1985. The fund seeks to achieve long-term growth of capital by investing primarily in the common stocks of companies operating in sectors T. Rowe Price believes will be the fastest growing in the United States. The accompanying financial statements were prepared in accordance with generally accepted accounting principles, which require the use of estimates made by fund management. Valuation Equity securities listed or regularly traded on a securities exchange are valued at the last quoted sales price 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 and securities regularly traded in the over-the-counter market are valued at the mean of the latest bid and asked prices. Other equity securities are valued at a price within the limits of the latest bid and asked prices deemed by the Board of Trustees, or by persons delegated by the Board, best to reflect fair value. Investments in mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. Assets and liabilities for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by or under the supervision of the officers of the fund, as authorized by the Board of Trustees. Currency Translation Assets 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 offer prices of such currencies against U.S. dollars quoted by a major bank. Purchases and sales of securities and income and expenses are translated into U.S. dollars at the prevailing exchange rate on the dates of such transactions. The effect of changes in foreign exchange rates on realized and unrealized security gains and losses is reflected as a component of such gains and losses. Other Income and expenses are recorded on the accrual basis. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Dividend income and distributions to shareholders are recorded by the fund on the ex-dividend date. Income and capital gain distributions are determined in accordance with federal income tax regulations and may differ from net investment income and realized gains determined in accordance with generally accepted accounting principles. Expenses paid indirectly reflect credits earned on daily uninvested cash balances at the custodian and are used to reduce the fund's custody charges. NOTE 2 - INVESTMENT TRANSACTIONS - -------------------------------- Purchases and sales of portfolio securities, other than short-term securities, aggregated $633,205,000 and $804,661,000, respectively, for the year ended December 31, 2001. 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 capital gains. Because federal income tax regulations differ from generally accepted accounting principles, income and capital gain distributions determined in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Accordingly, the character of distributions and composition of net assets for tax purposes differ from those reflected in the accompanying financial statements. Distributions during the year ended December 31, 2001 totaled $24,211,000 and were characterized as long-term capital gain for tax purposes. The tax-basis components of net assets at December 31, 2001 were as follows: Unrealized appreciation $ 383,284,000 Unrealized depreciation (156,257,000) Net unrealized appreciation (depreciation) 227,027,000 Capital loss carryforwards (63,480,000) Distributable earnings 163,547,000 Paid-in capital 1,019,736,000 Net assets $ 1,183,283,000 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. For the year ended December 31, 2001, $14,157,000 of realized capital losses reflected in the accompanying financial statements will not be recognized for federal income tax purposes until 2002. Further, the fund intends to retain realized capital gains that may be offset against available capital loss carryforwards for federal income tax purposes. As of December 31, 2001, the fund had $63,480,000 of capital loss carryforwards that expire in 2009. For financial reporting purposes, capital accounts and distributions to shareholders are adjusted to reflect the tax character of permanent book/tax differences. For the year ended December 31, 2001, the fund recorded the following permanent reclassifications, which relate primarily to the current net operating loss. Results of operations and net assets were not affected by these reclassifications. Undistributed net investment income $ 4,658,000 Undistributed net realized gain 127,000 Paid-in capital (4,785,000) At December 31, 2001, the cost of investments for federal income tax purposes was $964,306,000. 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. The investment management agreement between the fund and the manager provides for an annual investment management fee, of which $670,000 was payable at December 31, 2001. The fee is computed daily and paid monthly, and consists of an individual fund fee equal to 0.35% of average daily net assets and a group fee. The group fee is based on the combined assets of certain mutual funds sponsored by Price Associates (the group). The group fee rate ranges from 0.48% for the first $1 billion of assets to 0.295% for assets in excess of $120 billion. At December 31, 2001, and for the year then ended, the effective annual group fee rate was 0.32%. The fund pays a pro-rata share of the group fee based on the ratio of its net assets to those of the group. In addition, the fund has entered into agreements with Price Associates and two wholly owned subsidiaries of Price Associates, pursuant to which the fund receives certain other services. Price Associates computes the daily share price and maintains the financial records of the fund. T. Rowe Price Services, Inc. is the fund's transfer and dividend disbursing agent and provides shareholder and administrative services to the fund. T. Rowe Price Retirement Plan Services, Inc. provides subaccounting and recordkeeping services for certain retirement accounts invested in the fund. The fund incurred expenses pursuant to these related party agreements totaling approximately $3,199,000 for the year ended December 31, 2001, of which $277,000 was payable at year end. 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 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 year ended December 31, 2001, totaled $3,531,000 and are reflected as interest income in the accompanying Statement of Operations. T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- REPORT OF INDEPENDENT ACCOUNTANTS - --------------------------------- To the Board of Trustees and Shareholders of T. Rowe Price New America Growth Fund In our opinion, the accompanying statement of net assets 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 America Growth Fund (the "Fund") at December 31, 2001, 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 auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2001 by correspondence with the custodian, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Baltimore, Maryland January 18, 2002 T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- TAX INFORMATION (UNAUDITED) FOR THE TAX YEAR ENDED 12/31/01 - ----------------------------------------------------------- We are providing this information as required by the Internal Revenue Code. The amounts shown may differ from those elsewhere in this report because of differences between tax and financial reporting requirements. The fund's distributions to shareholders included $24,211,000 from long-term capital gains, subject to the 20% rate gains category. T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- ANNUAL MEETING RESULTS - ---------------------- The T. Rowe Price New America Growth Fund held an annual meeting on October 23, 2001, to elect an expanded slate of directors to increase the number of independent directors serving the fund. The results of voting were as follows (by number of shares): M. David Testa Affirmative: 21,839,706.142 Withhold: 341,495.763 Total: 22,181,201.905 John H. Laporte Affirmative: 21,853,293.422 Withhold: 327,908.483 Total: 22,181,201.905 Calvin W. Burnett Affirmative: 21,769,883.712 Withhold: 411,318.193 Total: 22,181,201.905 Anthony W. Deering Affirmative: 21,808,563.167 Withhold: 372,638.738 Total: 22,181,201.905 Donald W. Dick, Jr. Affirmative: 21,842,007.059 Withhold: 339,194.846 Total: 22,181,201.905 David K. Fagin Affirmative: 21,818,424.912 Withhold: 362,776.993 Total: 22,181,201.905 F. Pierce Linaweaver Affirmative: 21,800,797.859 Withhold: 380,404.046 Total: 22,181,201.905 Hanne M. Merriman Affirmative: 21,846,621.861 Withhold: 334,580.044 Total: 22,181,201.905 John G. Schreiber Affirmative: 21,813,103.098 Withhold: 368,098.807 Total: 22,181,201.905 Hubert D. Vos Affirmative: 21,815,097.276 Withhold: 366,104.629 Total: 22,181,201.905 Paul M. Wythes Affirmative: 21,826,717.271 Withhold: 354,484.634 Total: 22,181,201.905 James S. Riepe Affirmative: 21,838,039.008 Withhold: 343,162.897 Total: 22,181,201.905 T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- INDEPENDENT DIRECTORS - --------------------- NAME, TERM OF NUMBER OF ADDRESS, OFFICE* PRINCIPAL PORTFOLIOS OTHER AND AND OCCUPATION(S) IN FUND DIRECTOR- DATE POSITION(S) LENGTH DURING COMPLEX SHIPS OF OF HELD OF TIME PAST OVERSEEN PUBLIC BIRTH WITH FUND SERVED 5 YEARS BY DIRECTOR COMPANIES - ------------------------------------------------------------------------------- Calvin W. Director Elected President, 97 Provident Burnett, Ph.D. in Coppin State Bank of 100 East Pratt 2001 College Maryland Street 3/16/32 Anthony W. Director Elected Director, 97 The Rouse Deering in Chairman of Company 100 East Pratt 2001 the Board, Street President, and 1/28/45 Chief Executive Officer, The Rouse Company, real estate developers Donald W. Director Elected Principal, 97 Not Dick, Jr. in EuroCapital Applicable 100 East Pratt 1997 Advisors, LLC, Street an acquisition 1/27/43 and management advisory firm David K. Fagin Director Elected Director, 97 Dayton 100 East Pratt in Dayton Mining Mining Street 1997 Corporation Corpor- 4/9/38 (6/98 to ation, present), Golden Golden Star Star Resources Ltd., Resources and Canyon Ltd., and Resources, Canyon Corp. Resources, (5/00 to Corp. present); Chairman and President, Nye Corporation * Each director serves until election of a successor. T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- INDEPENDENT DIRECTORS - --------------------- NAME, TERM OF NUMBER OF ADDRESS, OFFICE* PRINCIPAL PORTFOLIOS OTHER AND AND OCCUPATION(S) IN FUND DIRECTOR- DATE POSITION(S) LENGTH DURING COMPLEX SHIPS OF OF HELD OF TIME PAST OVERSEEN PUBLIC BIRTH WITH FUND SERVED 5 YEARS BY DIRECTOR COMPANIES - ------------------------------------------------------------------------------- F. Pierce Director Elected President, 97 Not Linaweaver in F. Pierce Applicable 100 East Pratt 2001 Linaweaver & Street Associates, 8/22/34 Inc., consulting environmental & civil engineers Hanne M. Director Elected Retail 97 Ann Taylor Merriman in Business Stores 100 East Pratt 1997 Consultant Corpor- Street ation, 11/16/41 Ameren Corp., Finlay Enter- prises, Inc., The Rouse Company, and US Airways Group, Inc. John G. Director Elected Owner/ 97 AMLI Schreiber in President, Resi- 100 East Pratt 2001 Centaur Capital dential Street Partners, Inc., Properties 10/21/46 a real estate Trust, investment Host company; Senior Marriott Advisor and Corpor- Partner, ation, Blackstone and The Real Estate Rouse Advisors, L.P. Company, real estate developers * Each director serves until election of a successor. T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- INDEPENDENT DIRECTORS - --------------------- NAME, TERM OF NUMBER OF ADDRESS, OFFICE* PRINCIPAL PORTFOLIOS OTHER AND AND OCCUPATION(S) IN FUND DIRECTOR- DATE POSITION(S) LENGTH DURING COMPLEX SHIPS OF OF HELD OF TIME PAST OVERSEEN PUBLIC BIRTH WITH FUND SERVED 5 YEARS BY DIRECTOR COMPANIES - ------------------------------------------------------------------------------- Hubert D. Vos Director Elected Owner/ 97 Not 100 East Pratt in President, Applicable Street 1997 Stonington 8/2/33 Capital Corporation, a private investment company Paul M. Wythes Director Elected Founding 97 Teltone 100 East Pratt in Partner of Corpor- Street 1997 Sutter Hill ation 6/23/33 Ventures, a venture capital limited partnership, providing equity capital to young high technology companies throughout the United States * Each director serves until election of a successor. INSIDE DIRECTORS - ---------------- NAME, TERM OF NUMBER OF ADDRESS, OFFICE* PRINCIPAL PORTFOLIOS OTHER AND AND OCCUPATION(S) IN FUND DIRECTOR- DATE POSITION(S) LENGTH DURING COMPLEX SHIPS OF OF HELD OF TIME PAST OVERSEEN PUBLIC BIRTH WITH FUND SERVED 5 YEARS BY DIRECTOR COMPANIES - ------------------------------------------------------------------------------- John H. Director Elected Managing 32 Not Laporte in Director, Applicable 100 East Pratt 1985 T. Rowe Price; Street Nanaging 7/26/45 Director and Director, T. Rowe Price Group, Inc. * Each director serves until election of a successor. T. ROWE PRICE NEW AMERICA GROWTH FUND - ------------------------------------- INDEPENDENT DIRECTORS - --------------------- NAME, TERM OF NUMBER OF ADDRESS, OFFICE* PRINCIPAL PORTFOLIOS OTHER AND AND OCCUPATION(S) IN FUND DIRECTOR- DATE POSITION(S) LENGTH DURING COMPLEX SHIPS OF OF HELD OF TIME PAST OVERSEEN PUBLIC BIRTH WITH FUND SERVED 5 YEARS BY DIRECTOR COMPANIES - ------------------------------------------------------------------------------- James S. Riepe Director Elected Vice Chairman 82 Not 100 East Pratt in of the Board, Applicable Street 1993 Director and 6/25/43 Managing Director, T. Rowe Price Group, Inc.; Director and Managing Director, T. Rowe Price; Chairman of the Board and Director, 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. M. David Testa Director Elected Vice Chairman 97 Not 100 East Pratt in of the Board, Applicable Street 1997 Chief 4/22/44 Investment Officer, Director, and Managing Director, T. Rowe Price Group, Inc.; Chief Investment Officer, Director, and Managing Director, T. Rowe Price; Vice President and Director, T. Rowe Price Trust Company; Director, T. Rowe Price International Inc. * Each director serves until election of a successor. T. ROWE PRICE MUTUAL FUNDS - -------------------------- STOCK FUNDS - ----------- Domestic Blue Chip Growth* Capital Appreciation Capital Opportunity Developing Technologies Diversified Small-Cap Growth Dividend Growth Equity Income* Equity Index 500 Extended Equity Market Index Financial Services Growth & Income Growth Stock* Health Sciences Media & Telecommunications Mid-Cap Growth* Mid-Cap Value New America Growth New Era New Horizons** Real Estate Science & Technology* Small-Cap Stock* Small-Cap Value* Spectrum Growth Tax-Efficient Growth Tax-Efficient Multi-Cap Growth Total Equity Market Index Value* BLENDED ASSET FUNDS - ------------------- Balanced Personal Strategy Balanced Personal Strategy Growth Personal Strategy Income Tax-Efficient Balanced BOND FUNDS - ---------- DOMESTIC TAXABLE - ---------------- Corporate Income GNMA High Yield* New Income Short-Term Bond Spectrum Income Summit GNMA U.S. Bond Index U.S. Treasury Intermediate U.S. Treasury Long-Term Domestic Tax-Free California Tax-Free Bond Florida Intermediate Tax-Free Georgia Tax-Free Bond Maryland Short-Term Tax-Free Bond Maryland Tax-Free Bond New Jersey Tax-Free Bond New York Tax-Free Bond Summit Municipal Income Summit Municipal Intermediate Tax-Free High Yield Tax-Free Income Tax-Free Intermediate Bond Tax-Free Short-Intermediate Virginia Tax-Free Bond MONEYMARKET FUNDS+ - ------------------ TAXABLE - ------- Prime Reserve Summit Cash Reserves U.S. Treasury Money Tax-Free California Tax-Free Money Maryland Tax-Free Money New York Tax-Free Money Summit Municipal Money Market Tax-Exempt Money INTERNATIONAL/GLOBAL FUNDS - -------------------------- STOCK - ----- Emerging Europe & Mediterranean Emerging Markets Stock European Stock Global Stock Global Technology International Discovery** International Equity Index International Growth & Income International Stock* Japan Latin America New Asia Spectrum International Bond Emerging Markets Bond International Bond* For more information about T. Rowe Price funds or services, please contact us directly at 1-800-225-5132. * T. Rowe Price Advisor Class available for these funds. The T. Rowe Price Advisor Class is offered only through financial intermediaries. For more information about T. Rowe Price Advisor Class funds, contact your financial professional or T. Rowe Price at 1-877-804-2315. ** Closed to new investors. + Investments in the funds are not insured or guaranteed by the FDIC or any other government agency. Although the funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the funds. Please call for a prospectus, which contains complete information, including risks, fees, and expenses. Read it carefully before investing. T. Rowe Price Investment Services, Inc. 100 East Pratt Street Baltimore, MD 21202 F60-050 12/31/01 -----END PRIVACY-ENHANCED MESSAGE-----