-----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, Oilnl+82PPdXbQ0zdUu6QDuJ8ld/2xVsJsXlawIbfA+z+BwVDpIhJ6fFN40LBHC1 w3Oa3WykaIZFr79Qrmw7lA== 0000773485-03-000002.txt : 20030221 0000773485-03-000002.hdr.sgml : 20030221 20030221152239 ACCESSION NUMBER: 0000773485-03-000002 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030221 EFFECTIVENESS DATE: 20030221 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: 03575999 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 nag50020.txt T. ROWE PRICE NEW AMERICA GROWTH FUND Annual Report NEW AMERICA GROWTH FUND DECEMBER 31, 2002 T. ROWE PRICE(R) REPORT HIGHLIGHTS NEW AMERICA GROWTH FUND o The major stock indexes finished in negative territory for the third year in a row amid concerns about the struggling economy, corporate accounting scandals, and rising geopolitical concerns. o The fund outperformed the S&P 500 and the Lipper index of similar funds during the last six months. o We added a number of new holdings as the market's gyrations during the second half of the year offered many opportunities. o We enter 2003 with a portfolio of companies that have exciting growth prospects and the financial strength to flourish in good times, but also weather the bad. 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 Stocks fell for a third consecutive year as the bear market, which began in 2000, roared through 2002. Losses suffered in the past year placed investors at the doorstep of history, as the Dow Jones Industrial Average posted its worst loss since 1974. Last year's losses were not due to any single event. Instead, numerous financial scandals, a sluggish economy, continued fears over terrorism, and expectations of a war with Iraq left many investors fearful and skittish about owning stocks. PERFORMANCE COMPARISON Periods Ended 12/31/02 6 Months 12 Months New America Growth Fund -9.89% -28.54% ................................................................................. S&P 500 Stock Index -10.30 -22.10 ................................................................................. Lipper Multi-Cap Growth Funds Index -12.13 -29.82 ................................................................................. The New America Growth Fund's -28.54% 12-month return was less severe than similar growth-oriented funds, as measured by the Lipper Multi-Cap Growth Funds Index, which posted a -29.82% result. However, we underperformed the Standard & Poor's 500 Index's -22.10% result largely because of our focus on growth stocks. The broad S&P benchmark has a higher weighting in value oriented stocks, and value outpaced growth for the year. For the six-month period since June, New America Growth's -9.89% was modestly better than the S&P 500 and Lipper index, which returned -10.30% and -12.13%, respectively. MARKET ENVIRONMENT Stocks were volatile and lower in 2002, as the sluggish economy kept earnings depressed. Valuations were impacted by high-profile scandals at companies such as WorldCom and Enron and fear related to war and terrorism. The second and third quarters were particularly difficult, with both periods posting double-digit declines. Despite some weakness in December, stocks rebounded from depressed levels in the fourth quarter. Several factors encouraged renewed interest in equities, such as improving valuations, paltry bond and money market yields, and signs of improving earnings at some corporations. GROWTH VS. VALUE 3 Years 3 Years Periods Ended 12/31/02 1 Year Cumulative Annualized - -------------------------------------------------------------------------------- Russell 1000 Growth Index -27.88% -55.48% -23.64% Russell 1000 Value Index -15.52 -14.65 -5.14 Russell Midcap Growth Index -27.41 -48.84 -20.02 Russell Midcap Value Index -9.64 10.19 3.29 Russell 2000 Growth Index -30.26 -50.90 -21.11 Russell 2000 Value Index -11.43 24.05 7.45 The past year brought more of the same trend that has prevailed for the last three years--growth stocks underperformed value stocks. The returns disparity is massive and apparent across all market caps for the past 12 and 36 months. Among large stocks, the Russell 1000 Growth Index fell nearly 28% in 2002 versus a 15.5% drop in the Russell 1000 Value Index; over three years, the comparison is -23.6% annu-alized for large-cap growth versus -5.1% annualized for large value. Similarly, the Russell Midcap Growth Index fell 27.4% in 2002 versus a 9.6% drop in the Russell Midcap Value Index; over three years, the comparison is -20.0% annualized for growth versus a gain of 3.3% annualized for value. Across small-caps, the disparity is cavernous with the Russell 2000 Growth Index plunging more than 30% while its value counterpart lost 11.4%; over three years the disparity is magnified: the -21.1% annualized result for small-growth shares pales next to value's 7.5% average annualized gain. Granted, the outperformance of value stocks over the past three years was a reversal of the late 1990s when growth significantly outperformed. It is fairly common for one style to outperform the other over a multi-year period, only to reverse in the following years, as noted in the chart on the next page. We are optimistic that the future holds another period of outperformance for growth, which should benefit your fund. PORTFOLIO REVIEW For the 12 months ended December 31, most sectors fell: consumer staples, energy, and financials held up the best, while technology, telecom, and utilities were hit the hardest. Your fund's focus on faster- growing companies means that we had little or no exposure to slower growth The following table was depicted as a bar graph in the printed material. GROWTH VS. VALUE - RUSSELL 1000 Value 12/80 12/90 12/95 12/00 12/02 3.36 15.16 7.82 -1.18 -21.37 -12.36 6.69 4.42 15.17 -1.51 -42.99 8.41 -2.2 4.58 3.18 -46.51 16.96 -10.81 9.87 3.45 -36.73 -12.57 16.72 1.48 -14.83 -9.44 2.47 -0.6 -6.38 -4.07 -2.25 -1.85 -17.54 -1.5 -1.28 -6.02 -5.56 0.42 -8.59 -4.69 6.49 -13.66 2.29 9.1 -12.68 2.56 -2.07 -19.37 7.51 -12.3 -15.2 23.08 -17.98 -4.72 23.07 -14.7 -1.88 10.9 -13.76 6.51 16.13 -11.05 4.6 13.27 -2.36 6.32 27.79 -9.41 10.02 34.58 -4.64 4.44 14.51 sectors such as consumer staples, financials, telecom, and utilities than the S&P 500's weighting. Instead, we favor companies in sectors that hold higher-growth prospects found in business services, consumer discretionary (including media and retail), health care, and technology. The fund's three biggest contributors over the past 12 months were APOLLO GROUP, WELLPOINT HEALTH NETWORKS, and EXPEDIA. Longtime holding Apollo Group is the largest accredited private university in the United States, with a major presence in both physical campuses and online. In 2002, the company consistently expanded its enrollment the key metric underlying revenue growth) and earnings beyond expectations. Well managed and boasting a strong balance sheet, Apollo remains a core holding. WellPoint Health Networks is one of the country's largest managed health care companies. Solid earnings growth, a reasonable valuation, and the benefit of positive sector rotation earlier in the year contributed to WellPoint's gains. We are pleased by how quickly Expedia--a new stock in the fund this year--has contributed to our results, as it was our third-best stock for the past 12 months and our top contributor over the past six months. Expedia sells plane tickets, hotel rooms, and vacation packages to consumers over the Internet and is the largest online travel agent in the country. The purchase of travel-related services is a huge market, and we believe the migration from traditional travel agents to online agents is only in its infancy. The company's technology advantage has enabled it to seize the leadership spot and continue to take market share. With its excellent profitability and cash-rich balance sheet, it's the furthest thing from the popular conception of an Internet stock. We continue to own Expedia on the basis of its reasonable valuation and its prospects for above-average growth in both the leisure and corporate travel markets over the next several years. SECTOR DIVERSIFICATION 12/31/01 6/30/02 12/31/02 Consumer Discretionary 23% 23% 18% Consumer Staples 1 2 2 Energy 3 4 4 Financials 11 13 14 Health Care 16 21 20 Industrials and Business Services 12 15 18 Information Technology 23 18 20 Materials 0 0 0 Reserves 7 3 2 Telecommunication Services 4 1 2 Utilities 0 0 0 Total 100% 100% 100% In addition to Expedia, our top contributors since June were VODAFONE, FOREST LABORATORIES, and SYSCO. Vodafone is one of the world's largest and most diversified wireless telecom service providers. Following several tough years, its shares bounced back in the second half. We think the market has begun to recognize the company's solid assets (Vodafone is #1 or #2 in most of its markets), strong balance sheet, and attractive valuation. Forest is a mid-size pharmaceutical company with a strong anti-depressant franchise. Good sales of its key drug Celexa helped the company post outstanding earnings and powered the stock in 2002. Sysco is the largest foodservice distributor in North America. Sysco has a 30-year history of producing outstanding financial results, and 2002 was no different. The fund's largest performance detractor for the 12-month period was WESTERN WIRELESS. The wireless service market in the U.S. proved to be more challenging than we expected, as subscriber growth slowed materially, and vercapacity and competition ate away at profits. The firm's weakening balance sheet was the last straw for us, and we eliminated the stock earlier in the year. The fund's second-largest detractor over the past year was AOL TIME WARNER. The shares were hurt by eroding fundamentals at AOL classic (the Internet services division) and declining advertising revenues. We trimmed our exposure to this stock in the second half and may continue to do so in 2003. Longtime holding CONCORD EFS, the dominant provider of debit card and ATM processing through its STAR and MAC Networks, was the portfolio's largest detractor for the second half and third-biggest detractor for the year. The shares fell after the company reported disappointing third-quarter earnings. However, we like the fundamentals of the rapidly growing debit card market and believe Concord is uniquely positioned to take advantage of this growth, given its 50%-plus market share and its strong balance sheet. We viewed the sell-off as an opportunity to add to our position at a more attractive valuation. Similarly, investors punished the shares of LABORATORY CORPORATION OF AMERICA, our second-biggest detractor since June, for missing its third-quarter earnings forecast. Retailers HOME DEPOT and TARGET were the third- and fourth-biggest detractors, respectively, for the six months. Although we were reducing our Home Depot position in advance of the company's disappointing fourth-quarter preannouncement, we did not sell the stock aggressively enough to entirely avoid the sharp sell-off. Target, like most other retailers, posted below-forecast holiday sales. Combined with concerns over its foray into consumer credit, the stock was weak in the latter half of the year. We still hold a significant position in Target because we like its growth potential and believe the current valuation encompasses many of the risks inherent in owning the stock. Significant new purchases over the past year included FISERV, the country's largest outsourced-data processor for credit unions and regional banks; UNIVISION COMMUNICATIONS, the largest Hispanic-focused media company in the U.S.; and Concord EFS, as mentioned above. Significant sales during the past year included Apollo Group and WellPoint (both at significant gains) and FREDDIE MAC. INVESTMENT STRATEGY Given the extraordinary market conditions and losses experienced by investors over the past three years, I'd like to review our investment strategy in more detail and share some examples of how this strategy works in practice. Our strategy is deeply rooted in bottom-up, fundamental analysis. We seek to own the best growth companies in America's fastest-growing industries and across the entire market-cap spectrum. Our investments focus on companies that address large and growing market opportunities. We look for superior business models and strong management teams that are able not only to grow with their respective market but also to take market share and deliver growth rates above their respective market rates. Additionally, we are laser focused on profitable companies that have strong cash flows, which can help confirm the quality of their reported profits. We also insist on owning companies that feature strong balance sheets, as these companies have the best chance of seizing growth opportunities in a better environment but also have staying power through downturns. Finally, we constantly monitor our holdings' fundamentals and valuations to ensure that we are taking a prudent, but not excessive, level of risk. New America Growth's second-largest holding is FIRST DATA (FDC), a $27 billion company and the nation's largest processor of credit and debit card payments. Last year, U.S. consumers spent over $5 trillion on goods and services, but only about 30% of these purchases were transacted with credit and debit cards. The balance was purchased with cash and checks. This $5 trillion "market" should grow in line with the economy, and we expect debit and credit card use to grow at an even faster rate at the expense of cash and checkwriting. First Data also owns Western Union, the world's largest money transfer company. This business is growing faster than the card-payment business even though the company has only scratched the surface in large potential markets for money transfers such as China and India. Because card processing is a "scale" business, and because worldwide money transfers require a presence in almost every corner of the world, there is a tremendous advantage to holding the number one market share in each business, as unit costs are lower and entry barriers are higher. This enables FDC to maintain and incrementally grow its already large market share while maintaining well above-average profitability. Importantly, the company also generates strong free cash flow, which speaks to the quality of its profits, and enables FDC to maintain a very strong balance sheet. All told, we believe First Data's earnings can grow 15% per year over the next few years, even without a pickup in the economy. In our view, FDC's shares are undervalued by about 25%, and based on the company's aggressive stock repurchases, First Data's top-flight management team agrees. Another example of how our strategy works in practice is CHOICEPOINT. This $3.5 billion company specializes in helping companies and individuals manage and reduce risk. The business we are most excited about is called Workplace Solutions, which sells background-check data to businesses, the government, and consumers. Demand for background checks on potential or existing employees, vendors, customers, and service providers--has risen substantially over the past year-and-a-half. ChoicePoint has been a leader in providing this type of information for years and is in prime position to benefit from rising demand. The company has extremely high profit margins, generates strong cash flows, has a terrific balance sheet, and is superbly managed. We expect profits to rise roughly 20% per year over the next few years. When the stock trended lower this summer, we added significantly to our position. As long as the fundamentals remain solid and the valuation reasonable, we expect to hold this name in the portfolio for quite some time. OUTLOOK While we are certainly glad to put 2002 behind us, the turn of the calendar is not enough to lift several important uncertainties, including the potential war with Iraq and the ongoing sluggishness in the economy. However, we are optimistic on several fronts. First, the corporate shenanigans that plagued markets last year should almost certainly lessen in 2003, as business leaders understand that they are under the scrutiny not only of investors, but also those who carry handcuffs. Second, sluggish as it is, the U.S. economy should continue to benefit from low interest rates and low inflation, while President Bush's proposed tax cuts could provide a further stimulus later this year. Third, valuations have become more reasonable, especially for growth stocks. I am confident that our disciplined investment process will serve us well. As portfolio manager of the New America Growth Fund, I'm extremely fortunate to work with our talented group of in-house research analysts, who I believe are the best in our business. We enter 2003 with a portfolio of companies that have exciting growth prospects and the financial strength to flourish in good times, but also weather the bad. I believe the prospects for your fund are promising, and I look forward to updating you on our progress at midyear. Respectfully submitted, /s/ Joseph M. Milano Executive vice president and chairman of the fund's Investment Advisory Committee January 14, 2003 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 12/31/02 - -------------------------------------------------------------------------------- Microsoft 3.5% First Data 3.5 ChoicePoint 2.8 Omnicare 2.7 Cisco Systems 2.7 ................................................................................. Concord EFS 2.5 Sysco 2.0 Pfizer 2.0 Fiserv 1.9 Liberty Media 1.9 ................................................................................. Target 1.8 SunGard Data Systems 1.7 Apollo Group 1.7 Affiliated Computer Services 1.7 Citigroup 1.6 ................................................................................. Vodafone 1.6 Viacom 1.5 Baker Hughes 1.4 UnitedHealth Group 1.4 American International Group 1.4 ................................................................................. Kohl's 1.4 Freddie Mac 1.3 Pharmacia 1.3 Family Dollar Stores 1.3 Smith International 1.3 ................................................................................. Total 47.9% Note: Table excludes investments in the T. Rowe Price Reserve Investment Fund. T. ROWE PRICE NEW AMERICA GROWTH FUND ................................................................................. PORTFOLIO HIGHLIGHTS CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE 6 Months Ended 12/31/02 TEN BEST CONTRIBUTORS TEN WORST CONTRIBUTORS - -------------------------------------------------------------------------------- Expedia * 10(cent) Concord EFS -32(cent) Vodafone 8 Laboratory Corp. of America 21 Forest Laboratories * 5 Home Depot 14 Sysco 5 Target 14 Pharmacia 5 Brocade Communications Systems 11 Getty Images * 4 Baxter International 11 Adobe Systems * 4 Wyeth 10 Symantec * 3 BISYS Group 10 SLM Corporation * 3 Certegy 9 Wal-Mart * 3 Family Dollar Stores 9 Total 50(cent) Total -141(cent) 12 Months Ended 12/31/02 TEN BEST CONTRIBUTORS TEN WORST CONTRIBUTORS - -------------------------------------------------------------------------------- Apollo Group 22(cent) Western Wireless ** -40(cent) WellPoint Health Networks 11 AOL Time Warner 39 Expedia * 10 Concord EFS 38 Smith International 7 Home Depot 35 Weight Watchers 6 Clear Channel Communications 26 Forest Laboratories * 5 TMP Worldwide ** 24 Adobe Systems 5 Flextronics ** 23 Sysco * 4 Tyco International ** 23 Getty Images * 4 SmartForce PLC ** 22 Anthem 4 Peregrine Systems ** 21 Total 78(cent) Total -291(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 Lipper New America 12/31/1992 10000 10000 10000 12/31/1993 11008 11436.1 11744 12/31/1994 11153 11113 10871.3 12/31/1995 15345 14860.2 15688.7 12/31/1996 18868 17512.9 18827.7 12/31/1997 25163 21532.2 22799.7 12/31/1998 32354 26871.5 26879.2 12/31/1999 39162 39327.6 30308.3 12/31/2000 35595 34587.3 7116.6 12/31/2001 31364 25884.9 3892.9 12/31/2002 24432 18165.1 17074.1 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 12/31/02 1 Year 3 Years 5 Years 10 Years New America Growth Fund -28.54% -17.41% -5.62% 5.50% 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 ................................................................................. FINANCIAL HIGHLIGHTS For a share outstanding throughout each period Year Ended 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98 NET ASSET VALUE Beginning of period $ 30.87 $ 35.77 $ 48.06 $ 47.79 $ 44.19 Investment activities Net investment income (loss) (0.11) (0.12) (0.14) (0.20) (0.21) Net realized and unrealized gain (loss) (8.70) (4.14) (4.63) 5.87 7.65 Total from investment activities (8.81) (4.26) (4.77) 5.67 7.44 Distributions Net realized gain - (0.64) (7.52) (5.40) (3.84) NET ASSET VALUE END OF PERIOD $ 22.06 $ 30.87 $ 35.77 $ 48.06 $ 47.79 RATIOS/SUPPLEMENTAL DATA TOTAL RETURN^ (28.54)% (11.89)% (10.53)% 12.76% 17.89% Ratio of total expenses to average net assets 0.99% 0.99% 0.93% 0.94% 0.95% Ratio of net investment income (loss) to average net assets (0.42)% (0.36)% (0.33)% (0.43)% (0.49)% Portfolio turnover rate 61.5% 52.1% 81.4% 39.7% 45.6% Net assets, end of period (in millions) $ 761 $ 1,183 $ 1,519 $ 2,064 $ 2,064 ^ 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, 2002 STATEMENT OF NET ASSETS Shares Value In thousands COMMON STOCKS 97.6% CONSUMER DISCRETIONARY 17.0% HOTELS, RESTAURANTS & LEISURE 0.8% Starbucks * 300,000 $ 6,114 6,114 INTERNET & CATALOG RETAIL 1.0% USA Interactive * 335,000 7,678 7,678 MEDIA 6.3% AOL Time Warner * 375,000 4,913 Clear Channel Communications * 60,000 2,237 Comcast, Class A * 30,000 678 EchoStar Communications, Class A * 225,000 5,008 Getty Images * 116,000 3,544 Liberty Media, Class A * 1,600,000 14,304 Univision Communications, Class A * 230,000 5,635 Viacom, Class B * 280,000 11,413 47,732 MULTILINE RETAIL 7.0% Costco Wholesale * 220,000 6,173 Dollar General 440,000 5,258 Family Dollar Stores 320,000 9,987 Kohl's * 185,000 10,351 Target 465,000 13,950 Wal-Mart 150,000 7,577 53,296 SPECIALTY RETAIL 1.9% Home Depot 210,000 5,031 Weight Watchers * 200,000 9,194 14,225 Total Consumer Discretionary 129,045 CONSUMER STAPLES 2.3% FOOD & DRUG RETAILING 2.3% Sysco 515,000 15,342 Walgreen 60,000 1,751 Total Consumer Staples 17,093 T. ROWE PRICE NEW AMERICA GROWTH FUND ................................................................................. Shares Value In thousands ENERGY 4.0% ENERGY EQUIPMENT & SERVICES 4.0% Baker Hughes 340,000 $ 10,945 Diamond Offshore Drilling 430,000 9,395 Smith International * 300,000 9,786 Total Energy 30,126 FINANCIALS 13.4% BANKS 1.4% Mellon Financial 200,000 5,222 Northern Trust 150,000 5,257 10,479 DIVERSIFIED FINANCIALS 7.2% Charles Schwab 200,000 2,170 Citigroup 355,000 12,492 Freddie Mac 170,000 10,038 Goldman Sachs Group 135,000 9,194 SLM Corporation 65,000 6,751 State Street 200,000 7,800 Waddell & Reed Financial, Class A 306,900 6,037 54,482 INSURANCE 4.8% AMBAC Financial Group 85,000 4,780 American International Group 185,000 10,702 Hartford Financial Services Group 85,000 3,862 Marsh & McLennan 195,000 9,011 Progressive Corporation 65,000 3,226 Prudential 62,000 1,968 Travelers Property Casualty, Class A * 213,837 3,133 36,682 Total Financials 101,643 T. ROWE PRICE NEW AMERICA GROWTH FUND ................................................................................. Shares Value In thousands HEALTH CARE 19.8% BIOTECHNOLOGY 3.0% Amgen * 60,000 $ 2,900 Cephalon * 95,000 4,624 Genentech * 50,000 1,658 Gilead Sciences * 180,000 6,120 MedImmune * 290,000 7,879 23,181 HEALTH CARE EQUIPMENT & SUPPLIES 2.5% Baxter International 235,000 6,580 Biomet 120,000 3,439 Dentsply International 240,000 8,928 18,947 HEALTH CARE PROVIDERS & SERVICES 6.9% Anthem * 130,000 8,177 HCA 35,000 1,453 Laboratory Corporation of America * 260,000 6,043 Omnicare 875,000 20,851 UnitedHealth Group 130,000 10,855 WellPoint Health Networks * 70,000 4,981 52,360 PHARMACEUTICALS 7.4% Abbott Laboratories 230,000 9,200 Allergan 82,000 4,725 Eli Lilly 90,000 5,715 Forest Laboratories * 55,000 5,402 Pfizer 500,000 15,285 Pharmacia 240,000 10,032 Wyeth 165,000 6,171 56,530 Total Health Care 151,018 T. ROWE PRICE NEW AMERICA GROWTH FUND ................................................................................. Shares Value In thousands INDUSTRIALS & BUSINESS SERVICES 18.0% AEROSPACE & DEFENSE 0.6% Honeywell International 200,000 $ 4,800 4,800 AIR FREIGHT & LOGISTICS 1.0% UPS, Class B 125,000 7,885 7,885 COMMERCIAL SERVICES & SUPPLIES 14.4% Apollo Group, Class A * 290,000 12,760 BISYS Group * 200,000 3,180 Certegy * 359,900 8,836 ChoicePoint * 540,000 21,325 Concord EFS * 1,207,000 18,998 First Data 750,000 26,557 Fiserv * 430,000 14,598 Robert Half International * 180,000 2,900 109,154 INDUSTRIAL CONGLOMERATES 1.0% GE 311,000 7,573 7,573 MACHINERY 1.0% Danaher 120,000 7,884 7,884 Total Industrials & Business Services 137,296 INFORMATION TECHNOLOGY 19.9% COMMUNICATIONS EQUIPMENT 3.5% Brocade Communications Systems * 100,000 414 Cisco Systems * 1,550,000 20,305 Nokia ADR 185,000 2,868 QUALCOMM * 80,000 2,911 26,498 COMPUTER PERIPHERALS 0.4% Lexmark International, Class A * 60,000 3,630 3,630 INTERNET SOFTWARE & SERVICES 0.7% Expedia, Class A * 80,000 5,354 5,354 T. ROWE PRICE NEW AMERICA GROWTH FUND ................................................................................. Shares Value In thousands IT CONSULTING & SERVICES 4.6% Accenture, Class A * 517,000 $ 9,301 Affiliated Computer Services, Class A * 240,000 12,636 SunGard Data Systems * 550,000 12,958 34,895 SEMICONDUCTOR EQUIPMENT & PRODUCTS 4.7% Analog Devices * 325,000 7,758 Applied Materials * 400,000 5,212 Intersil Holding, Class A * 365,000 5,088 KLA-Tencor * 125,000 4,421 Maxim Integrated Products 230,000 7,599 Texas Instruments 375,000 5,629 35,707 SOFTWARE 6.0% Adobe Systems 185,000 4,588 Mercury Interactive * 145,000 4,300 Microsoft * 520,000 26,884 Siebel Systems * 215,000 1,608 Symantec * 100,000 4,051 VERITAS Software * 260,000 4,061 45,492 Total Information Technology 151,576 TELECOMMUNICATION SERVICES 1.6% WIRELESS TELECOMMUNICATION SERVICES 1.6% Vodafone ADR 665,000 12,050 Total Telecommunication Services 12,050 Total Miscellaneous Common Stocks 1.6% 12,488 Total Common Stocks (Cost $748,106) 742,335 SHORT-TERM INVESTMENTS 2.6% MONEY MARKET FUNDS 2.6% T. Rowe Price Reserve Investment Fund, 1.53% # 19,866,540 19,867 Total Short-Term Investments (Cost $19,867) 19,867 T. ROWE PRICE NEW AMERICA GROWTH FUND ................................................................................. Value In thousands Total Investments in Securities 100.2% of Net Assets (Cost $767,973) $ 762,202 Other Assets Less Liabilities (1,159) NET ASSETS $ 761,043 Net Assets Consist of: Undistributed net realized gain (loss) $(151,524) Net unrealized gain (loss) (5,771) Paid-in-capital applicable to 34,498,288 shares of no par value capital stock outstanding; unlimited shares authorized 918,338 NET ASSETS $ 761,043 NET ASSET VALUE PER SHARE $ 22.06 # 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 12/31/02 INVESTMENT INCOME (LOSS) Income Dividend $ 4,316 Interest 813 Total income 5,129 Expenses Investment management 6,113 Shareholder servicing 2,606 Custody and accounting 122 Prospectus and shareholder reports 86 Registration 27 Proxy and annual meeting 24 Legal and audit 16 Trustees 10 Miscellaneous 8 Total expenses 9,012 Expenses paid indirectly (85) Net expenses 8,927 Net investment income (loss) (3,798) REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain or loss on securities (73,887) Change in net unrealized gain or loss on securities (246,955) Net realized and unrealized gain (loss) (320,842) INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $(324,640) 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 12/31/02 12/31/01 INCREASE (DECREASE) IN NET ASSETS Operations Net investment income (loss) $ (3,798) $ (4,658) Net realized gain (loss) (73,887) (77,344) Change in net unrealized gain (loss) (246,955) (104,718) Increase (decrease) in net assets from operations (324,640) (186,720) Distributions to shareholders Net realized gain - (24,211) Capital share transactions * Shares sold 107,979 165,212 Distributions reinvested - 23,540 Shares redeemed (205,579) (313,336) Increase (decrease) in net assets from capital share transactions (97,600) (124,584) NET ASSETS Increase (decrease) during period (422,240) (335,515) Beginning of period 1,183,283 1,518,798 END OF PERIOD $ 761,043 $ 1,183,283 *Share information Shares sold 4,244 5,149 Distributions reinvested - 771 Shares redeemed (8,074) (10,054) Increase (decrease) in shares outstanding (3,830) (4,134) The accompanying notes are an integral part of these financial statements. T. ROWE PRICE NEW AMERICA GROWTH FUND ................................................................................. December 31, 2002 NOTES TO FINANCIAL STATEMENTS NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES T. Rowe Price New American Growth Fund, Inc. (the fund) is registered under the Investment Company Act of 1940 the 1940 Act) as a diversified, open-end management investment company and commenced operations on 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 accounting principles generally accepted in the United States of America, which require the use of estimates made by fund management. VALUATION Equity securities listed or regularly traded on a securities exchange or in the over-the-counter market are valued at the last quoted sale price, or official closing price for certain markets, at the time the valuations are made. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Listed securities not traded on a particular day are valued at the mean of the latest bid and ask prices for domestic securities and the last quoted sale price for international securities. Other equity securities are valued at a price within the limits of the latest bid and ask 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. EXPENSES PAID INDIRECTLY Certain security trades are directed to brokers who have agreed to rebate a portion of the related commission to the fund to pay fund expenses. Additionally, credits earned on temporarily uninvested cash balances at the custodian are used to reduce the fund's custody charges. Total expenses in the accompanying statement of operations are presented before reduction for rebates and credits, which totaled $84,000 and $1,000, respectively, for the year ended December 31, 2002. T. ROWE PRICE NEW AMERICA GROWTH FUND ................................................................................. OTHER Income and expenses are recorded on the accrual basis. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Dividend income and distributions to shareholders are recorded by the fund on the ex-dividend date. NOTE 2 - INVESTMENT TRANSACTIONS Purchases and sales of portfolio securities, other than short-term securities, aggregated $539,720,000 and $577,289,000, respectively, for the year ended December 31, 2002. NOTE 3 - FEDERAL INCOME TAXES No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company and distribute to shareholders all of its taxable income and gains. Federal income tax regulations differ from generally accepted accounting principles; therefore, distributions determined in accordance with tax regulations may differ 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. Temporary differences are not adjusted. There were no distributions in the year ended December 31. At December 31, 2002, the tax-basis components of net assets were as follows: Unrealized appreciation $ 134,674,000 Unrealized depreciation (152,036,000) Net unrealized appreciation (depreciation) (17,362,000) Capital loss carryforwards (139,933,000) Paid-in capital 918,338,000 Net assets $ 761,043,000 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, $11,591,000 of realized losses T. ROWE PRICE NEW AMERICA GROWTH FUND ................................................................................. reflected in the accompanying financial statements will not be recognized for tax purposes until 2003. The fund intends to retain realized gains to the extent of available capital loss carryforwards for federal income tax purposes. As of December 31, 2002, the fund had $63,480,000 of capital loss carryforwards that expire in 2009, and $76,453,000 that expire in 2010. For the year ended December 31, 2002, 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 $ 3,798,000 Paid-in capital (3,798,000) At December 31, 2002, the cost of investments for federal income tax purposes was $779,564,000. 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 net assets to those of the group. At December 31, 2002, the effective annual group fee rate was 0.32%, and investment management fee payable totaled $445,000. 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. T. ROWE PRICE NEW AMERICA GROWTH FUND ................................................................................. provides shareholder and administrative services in its capacity as the fund's transfer and dividend disbursing agent. T. Rowe Price Retirement Plan Services, Inc. provides subaccounting and recordkeeping services for certain retirement accounts invested in the fund. Expenses incurred pursuant to these service agreements totaled $2,116,000 for the year ended December 31, 2002, of which $211,000 was payable at period 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, 2002, totaled $813,000 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, 2002, 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, 2002 by correspondence with the custodian, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Baltimore, Maryland January 21, 2003 T. ROWE PRICE NEW AMERICA GROWTH FUND ................................................................................. Your fund is governed by a Board of Trustees that meets regularly to review investments, performance, expenses, and other business matters, and is responsible for protecting the interests of shareholders. The majority of the fund's trustees are independent of T. Rowe Price Associates, Inc. (OT. Rowe PriceO); OinsideO trustees are officers of T. Rowe Price. The Board of Trustees elects the fund's officers, who are listed in the final table. The business address of each trustee and officer is 100 East Pratt Street, Baltimore, MD 21202. INDEPENDENT TRUSTEES NAME (DATE 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 (1/28/45) Chief Executive Officer, The Rouse Company, real 2001 estate developers Donald W. Dick, Jr. Principal, EuroCapital Advisors, LLC, an (1/27/43) acquisition and management advisory firm 1985 David K. Fagin Director, Dayton Mining Corp. (6/98 to present), (4/9/38) Golden Star Resources Ltd., and Canyon Resources 1994 Corp. (5/00 to present); Chairman and President, Nye Corp. F. Pierce Linaweaver President, F. Pierce Linaweaver & Associates,Inc., (8/22/34) consulting environmental and civil engineers 2001 Hanne M. Merriman Retail Business Consultant; Director, Ann Taylor (11/16/41) Stores Corp., Ameren Corp., Finlay Enterprises, 1994 Inc., The Rouse Company, and US Airways Group,Inc. John G. Schreiber Owner/President, Centaur Capital Partners, Inc., a (10/21/46) real estate investment company; Senior Advisor and 2001 Partner, Blackstone Real Estate Advisors, L.P.; Director, AMLI Residential Properties Trust, Host Marriott Corp., and The Rouse Company Hubert D. Vos Owner/President, Stonington Capital Corp., a (8/2/33) private investment company 1994 Paul M. Wythes Founding Partner, Sutter Hill Ventures, a venture (6/23/33) capital limited partnership, providing equity 1985 capital to young high technology companies throughout the United States; Director, Teltone Corp. *Each independent trustee oversees 105 T. Rowe Price portfolios and serves until the election of a successor. T. ROWE PRICE NEW AMERICA GROWTH FUND ................................................................................. INSIDE TRUSTEES NAME (DATE OF BIRTH) YEAR ELECTED* [NUMBER OF T. ROWE PRICE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS AND PORTFOLIOS OVERSEEN] DIRECTORSHIPS OF OTHER PUBLIC COMPANIES John H. Laporte Director and Vice President, T. Rowe Price Group, (7/26/45) Inc.; Vice President, T. Rowe Price; Vice 1985 President, New America Growth Fund [15] James S. Riepe Director and Vice President, T. Rowe Price; Vice (6/25/43) Chairman of the Board, Director, and Vice 1985 President, T. Rowe Price Group, Inc.; Chairman of [105] the Board and Director, T. Rowe Price Global Asset Management 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., and T. Rowe Price Global Investment Services Limited; Chairman of the Board, New America Growth Fund M. David Testa Chief Investment Officer, Director, and Vice (4/22/44) President, T. Rowe Price; Vice Chairman of the 1997 Board, Chief Investment Officer, Director, and [105] Vice President, T. Rowe Price Group, Inc.; Director, T. Rowe Price Global Asset Management Limited, T. Rowe Price Global Investment Services Limited, and T. Rowe Price International, Inc.; Director and Vice President, T. Rowe Price Trust Company *Each inside trustee serves until the election of a successor. T. ROWE PRICE NEW AMERICA GROWTH FUND ................................................................................. OFFICERS NAME (DATE OF BIRTH) TITLE AND FUND(S) SERVED PRINCIPAL OCCUPATION(S) Joseph A. Carrier (12/30/60) Vice President, T. Rowe Price, T. Rowe Price Treasurer, Group, Inc., and T. Rowe Price Investment New America Growth Fund Services, Inc. Giri Devulapally (11/18/67) Vice President, T. Rowe Price and T. Rowe Vice President, Price Group, Inc. New America Growth Fund Eric M. Gerster (3/23/71) Vice President, T. Rowe Price and T. Rowe Vice President, Price Group, Inc. New America Growth Fund Henry H. Hopkins (12/23/42) Director and Vice President, T. Rowe Price Vice President, Group, Inc., T. Rowe Price Investment New America Growth Fund Services, Inc., T. Rowe Price Services, Inc., and T. Rowe Price Trust Company; Vice President, T. Rowe Price, T. Rowe Price International, Inc., and T. Rowe Price Retirement Plan Services, Inc. J. Jeffrey Lang (1/10/62) Vice President, T. Rowe Price and T. Rowe Vice President, Price Trust Company New America Growth Fund Christopher R. Leonard (1/11/73) Vice President, T. Rowe Price and T. Rowe Vice President, Price Group, Inc. New America Growth Fund Patricia B. Lippert (1/12/53) Assistant Vice President, T. Rowe Price and Secretary, T. Rowe Price Investment Services, Inc. New America Growth Fund Robert J. Marcotte (3/6/62) Vice President, T. Rowe Price and T. Rowe Vice President, Price Group, Inc. New America Growth Fund David S. Middleton (1/18/56) Vice President, T. Rowe Price, T. Rowe Price Controller, Group, Inc., and T. Rowe Price Trust Company New America Growth Fund Joseph M. Milano (9/14/72) Vice President, T. Rowe Price and T. Rowe Executive Vice President, Price Group, Inc. New America Growth Fund Robert W. Smith (4/11/61) Vice President, T. Rowe Price, T. Rowe Price President, Group, Inc., and T. Rowe Price International, New America Growth Fund Inc. R. Candler Young (9/28/71) Vice President, T. Rowe Price and T. Rowe Vice President, Price Group, Inc; formerly Investment Banking New America Growth Fund Summer Associate, Goldman Sachs & Company (to 1999) Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least five years. T. ROWE PRICE INVESTMENT SERVICES AND INFORMATION ................................................................................. INVESTMENT SERVICES AND INFORMATION KNOWLEDGEABLE SERVICE REPRESENTATIVES BY PHONE 1-800-225-5132. Available Monday through Friday from 7 a.m. until midnight ET and weekends from 8:30 a.m. until 5 p.m. ET. IN PERSON. Available in T. Rowe Price Investor Centers. Please call a service representative at 1-800-225-5132 or visit the Web at www.troweprice.com/investorcenter to locate a center near you. ACCOUNT SERVICES AUTOMATED 24-HOUR SERVICES INCLUDING TELE*ACCESS(R)and Account Access through the T. Rowe Price Web site on the Internet. Address: www.troweprice.com. AUTOMATIC INVESTING. From your bank account or paycheck. AUTOMATIC WITHDRAWAL. Scheduled, automatic redemptions. IRA REBALANCING. Ensuring that your accounts reflect your desired asset allocation. BROKERAGE SERVICES * INDIVIDUAL INVESTMENTS. Stocks, bonds, options, precious metals, and other securities at a savings over full-service commission rates. INVESTMENTINFORMATION CONSOLIDATED STATEMENT. Overview of all of your accounts. SHAREHOLDER REPORTS. Manager reviews of their strategies and results. T. ROWE PRICE REPORT. Quarterly investment newsletter. PERFORMANCE UPDATE. Quarterly review of all T. Rowe Price fund results. INSIGHTS. Educational reports on investment strategies and markets. INVESTMENT GUIDES. Asset Mix Worksheet, Diversifying Overseas: A Guide to International Investing, Retirement Planning Kit, Retirement Readiness Guide, and Tax Considerations Guide. * T. Rowe Price Brokerage is a division of T. Rowe Price Investment Services, Inc., Member NASD/SIPC. T. ROWE PRICE MUTUAL FUNDS ................................................................................. STOCK FUNDS BLENDED ASSET FUNDS MONEYMARKET FUNDS DOMESTIC (CONTINUED) TAXABLE Blue Chip Growth* Retirement 2020 Prime Reserve Capital Appreciation Retirement 2030 Summit Cash Reserves Capital Opportunity Retirement 2040 U.S. Treasury Money Developing Technologies Retirement Income TAX-FREE Diversified Small-Cap Tax-Efficient Balanced California Tax-Free Money Growth Maryland Tax-Free Money Dividend Growth BOND FUNDS New York Tax-Free Money Equity Income* DOMESTIC TAXABLE Summit Municipal Money Equity Index 500 Corporate Income Market Extended Equity Market GNMA Tax-Exempt Money Index High Yield* Financial Services Inflation Protected Bond INTERNATIONAL/ Growth & Income New Income* GLOBAL FUNDS Growth Stock* Short-Term Bond STOCK Health Sciences Spectrum Income Emerging Europe & Media & Telecommuni- Summit GNMA Mediterranean cations U.S. Bond Index Emerging Markets Stock Mid-Cap Growth* U.S. Treasury Intermediate European Stock Mid-Cap Value* U.S. Treasury Long-Term Global Stock New America Growth DOMESTIC TAX-FREE Global Technology New Era California Tax-Free Bond International Discovery New Horizons Florida Intermediate International Equity Real Estate Tax-Free Index Science & Technology* Georgia Tax-Free Bond International Growth Small-Cap Stock* Maryland Short-Term & Income* Small-Cap Value* Tax-Free Bond International Stock* Spectrum Growth Maryland Tax-Free Bond Japan Tax-Efficient Growth New Jersey Tax-Free Bond Latin America Tax-Efficient Multi-Cap New York Tax-Free Bond New Asia Growth Summit Municipal Income Spectrum International Total Equity Market Index Summit Municipal BOND Value* Intermediate Emerging Markets Bond Tax-Free High Yield International Bond* BLENDED ASSET FUNDS Tax-Free Income* Balanced Tax-Free Intermediate Personal Strategy Balanced Bond Personal Strategy Growth Tax-Free Short- Personal Strategy Income Intermediate Retirement 2010 Virginia Tax-Free 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 29240 F60-050 12/31/02 -----END PRIVACY-ENHANCED MESSAGE-----