N-CSR 1 nag.txt T. ROWE PRICE NEW AMERICA GROWTH FUND Item 1. Report to Shareholders T. Rowe Price New America Growth Fund -------------------------------------------------------------------------------- December 31, 2003 Certified Annual Report This report is certified under the Sarbanes-Oxley Act of 2002, which requires that public companies, including mutual funds, affirm that the information provided in their annual and semiannual shareholder reports fully and fairly represents their financial position. T. Rowe Price New America Growth Fund -------------------------------------------------------------------------------- Certified Annual Report 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. [Graphic Omitted] NEW AMERICA GROWTH FUND -------------------------------------------------------------------------------- As of 12/31/03 Lipper Multi-Cap Growth Funds Index $ 21,504 New America Growth Fund $ 19,659 S&P 500 Stock Index $ 28,563 Lipper Multi-Cap S&P 500 Growth New America Stock Index Funds Index Growth Fund 12/93 $ 10,000 $ 10,000 $ 10,000 12/94 10,132 9,717 9,257 12/95 13,940 12,994 13,359 12/96 17,140 15,314 16,032 12/97 22,859 18,828 19,414 12/98 29,392 23,497 22,888 12/99 35,576 34,389 25,807 12/00 32,337 30,244 23,090 12/01 28,493 22,634 20,345 12/02 22,196 15,884 14,539 12/03 28,563 21,504 19,659 Average Annual Compound Total Return Periods Ended 12/31/03 1 Year 5 Years 10 Years -------------------------------------------------------------------------------- New America Growth Fund 35.22% -3.00% 6.99% S&P 500 Stock Index 28.68 -0.57 11.07 Lipper Multi-Cap Growth Funds Index 35.38 -1.76 7.96 Returns do not reflect taxes that the shareholder may pay on fund distributions or the redemption of fund shares. Past performance cannot guarantee future results. T. Rowe Price New America Growth Fund -------------------------------------------------------------------------------- Certified Annual Report Dear Shareholder, We are pleased to report that the New America Growth Fund generated solid returns for the 12-month period ended December 31, 2003. The fund's 2003 return outpaced the S&P 500 Stock Index and modestly trailed the Lipper Multi-Cap Growth Funds Index. The fund especially benefited from stocks in the information technology (semiconductors and semiconductor equipment makers) and health care (services and providers) sectors. As you know, the fund's investment objective is to provide long-term capital growth through investments primarily in the common stocks of U.S. companies that operate in those sectors of the economy identified by T. Rowe Price as the fastest growing or having the greatest growth potential. The choice of sectors reflects factors such as overall revenue growth of the component companies and/or the sector's contribution to gross domestic product from year to year. [Graphic Omitted] Major Index Returns 12-Month Return -------------------------------------------------------------------------------- S&P 500 Stock Index 29% S&P MidCap 400 Index 36% Russell 2000 Index 47% Nasdaq Composite 50% The Major Index Returns chart shows how various domestic stock markets performed over the past 12 months. As you can see, domestic stocks registered solid returns, with the technology-laden Nasdaq Composite and the small-cap Russell 2000 Index showing the best results. Mid-cap stocks also outperformed large-cap stocks, as represented by the S&P 500 Stock Index. The Top 5 Sectors table shows how the fund's assets were allocated as of December 31, 2003. Information technology stocks were the largest sector allocation at 27.9% of net assets, reduced from 30.8% a year earlier. Health care holdings were relatively unchanged at 19.2%, modestly lower than 20.0% 12 months ago. Top 5 Sectors Percent of Net Assets 12/31/02 12/31/03 -------------------------------------------------------------------------------- Information Technology 30.8% 27.9% Health Care 20.0 19.2 Consumer Discretionary 15.1 17.0 Financials 13.5 11.9 Industrials and Business Services 8.5 10.7 For comparison purposes, we have restated the historical weightings to incorporate changes to the sector and industry classification system. The Best and Worst Contributors table shows the stocks with the greatest impact on the fund's performance during the year. Communications equipment provider Cisco Systems and pharmacy-services provider Omnicare were the top positive contributors. Each of the fund's worst contributors was eliminated from the portfolio before the end of 2003. Best and Worst Contributors 12 Months Ended 12/31/03 Best Contributors -------------------------------------------------------------------------------- Cisco Systems Omnicare Applied Materials Apollo Group International Game Technology * Worst Contributors -------------------------------------------------------------------------------- Weight Watchers ** Concord EFS ** BISYS Group ** Baxter International ** Mellon Financial ** * Position added ** Position eliminated Finally, I'm sure you are aware that mutual fund companies have recently come under scrutiny for their trading policies. The investigations have led to allegations that executives of several mutual fund companies permitted or engaged in improper mutual fund trading. In addition, certain intermediaries that process fund transactions are alleged to have assisted some investors in executing improper mutual fund trades. I want T. Rowe Price shareholders to know that we emphatically condemn the abuses that have been revealed or alleged against other firms in our industry. Our firm has not entered and will not enter into any agreements with any investors or intermediaries that authorize after-hours trading or excessive short-term trading in any of our funds. T. Rowe Price investors can be assured that our firm unequivocally opposes illegal or inappropriate trading of any nature and has policies and procedures in place designed to protect the best interests of our long-term shareholders. No T. Rowe Price executives or portfolio managers or investment personnel of the T. Rowe Price mutual funds have engaged in any inappropriate trading of T. Rowe Price mutual funds. You may find out more about our trading policies and the steps we take to protect your interests by visiting our Web site (troweprice.com). These policies are also spelled out in your fund's prospectus. We thank you for your continued support. Respectfully, James S. Riepe Chairman January 20, 2004 T. Rowe Price New America Growth Fund -------------------------------------------------------------------------------- Certified Annual Report Financial Highlights For a share outstanding throughout each period -------------------------------------------------------------------------------- Year Ended 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 NET ASSET VALUE Beginning of period $ 22.06 $ 30.87 $ 35.77 $ 48.06 $ 47.79 Investment activities Net investment income (loss) (0.09) (0.11) (0.12) (0.14) (0.20) Net realized and unrealized gain (loss) 7.86 (8.70) (4.14) (4.63) 5.87 Total from investment activities 7.77 (8.81) (4.26) (4.77) 5.67 Distributions Net realized gain - - (0.64) (7.52) (5.40) NET ASSET VALUE End of period $ 29.83 $ 22.06 $ 30.87 $ 35.77 $ 48.06 ----------------------------------------------------- Ratios/Supplemental Data Total return^ 35.22% (28.54)% (11.89)% (10.53)% 12.76% Ratio of total expenses to average net assets 0.98% 0.99% 0.99% 0.93% 0.94% Ratio of net investment income (loss) to average net assets (0.34)% (0.42)% (0.36)% (0.33)% (0.43)% Portfolio turnover rate 61.6% 61.5% 52.1% 81.4% 39.7% Net assets, end of period (in millions) $ 915 $ 761 $ 1,183 $ 1,519 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 -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 Portfolio of Investments (ss.) Shares Value -------------------------------------------------------------------------------- ($ 000s) COMMON STOCKS 99.4% CONSUMER DISCRETIONARY 16.4% Automobiles 1.8% Harley-Davidson 350,000 16,636 16,636 Hotels, Restaurants & Leisure 1.9% International Game Technology 490,000 17,493 17,493 Household Durables 0.3% Harman International 32,000 2,367 2,367 Media 7.4% Clear Channel Communications 240,000 11,239 EchoStar Communications, Class A * 150,000 5,100 Getty Images * 195,500 9,801 Liberty Media, Class A * 1,200,000 14,268 Scripps, Class A 110,000 10,355 Viacom, Class B 380,000 16,864 67,627 Multiline Retail 1.9% Family Dollar Stores 360,000 12,917 Target 117,000 4,493 17,410 Specialty Retail 3.1% PETsMART 395,000 9,401 Ross Stores 451,000 11,920 Staples * 275,000 7,507 28,828 Total Consumer Discretionary 150,361 CONSUMER STAPLES 4.9% Food & Staples Retailing 4.9% Costco Wholesale * 200,000 7,436 Sysco 620,000 23,082 Wal-Mart 180,000 9,549 Whole Foods Market * 75,000 5,035 Total Consumer Staples 45,102 ENERGY 4.9% Energy Equipment & Services 4.9% Baker Hughes 450,000 14,472 Cooper Cameron * 175,000 8,155 Diamond Offshore Drilling 450,000 9,230 Smith International * 300,000 12,456 Total Energy 44,313 FINANCIALS 11.2% Capital Markets 5.4% Goldman Sachs Group 155,000 15,303 Investor's Financial Services 65,000 2,497 Lehman Brothers 90,000 6,950 Morgan Stanley 119,000 6,887 State Street 180,000 9,374 Waddell & Reed Financial, Class A 362,000 8,492 49,503 Consumer Finance 0.7% SLM Corporation 175,000 6,594 6,594 Diversified Financial Services 2.2% Citigroup 250,000 12,135 Principal Financial Group 230,000 7,606 19,741 Insurance 2.3% American International Group 230,000 15,244 Travelers Property Casualty, Class A 369,037 6,193 21,437 Thrifts & Mortgage Finance 0.6% Radian Group 110,000 5,362 5,362 Total Financials 102,637 HEALTH CARE 18.1% Biotechnology 2.6% Amgen * 195,000 12,051 Cephalon * 122,300 5,921 Gilead Sciences * 96,200 5,593 23,565 Health Care Equipment & Supplies 3.0% Dentsply International 175,000 7,905 Medtronic 285,000 13,854 Stryker 70,000 5,950 27,709 Health Care Providers & Services 6.3% Anthem * 110,000 8,250 Laboratory Corporation of America * 383,000 14,152 Omnicare 450,000 18,176 UnitedHealth Group 290,000 16,872 57,450 Pharmaceuticals 6.2% Eli Lilly 110,000 7,736 Forest Laboratories * 265,000 16,377 IVAX * 350,000 8,358 Johnson & Johnson 120,000 6,199 Pfizer 500,000 17,665 56,335 Total Health Care 165,059 INDUSTRIALS & BUSINESS SERVICES 10.7% Aerospace & Defense 0.9% Lockheed Martin 165,000 8,481 8,481 Air Freight & Logistics 2.8% UPS, Class B 340,000 25,347 25,347 Commercial Services & Supplies 5.1% Apollo Group, Class A * 165,000 11,220 ChoicePoint * 605,000 23,045 Education Management * 386,000 11,981 46,246 Industrial Conglomerates 1.2% General Electric 345,000 10,688 10,688 Machinery 0.2% Danaher 25,000 2,294 2,294 Trading Companies & Distributors 0.5% Fastenal 100,000 4,994 4,994 Total Industrials & Business Services 98,050 INFORMATION TECHNOLOGY 27.6% Communications Equipment 2.0% Cisco Systems * 775,000 18,825 18,825 Computer & Peripherals 2.2% Dell * 583,000 19,799 19,799 Electronic Equipment & Instruments 1.7% CDW 275,000 15,884 15,884 Internet Software & Services 1.2% InterActiveCorp * 318,262 10,798 10,798 IT Services 8.3% Accenture, Class A * 190,000 5,001 Affiliated Computer Services, Class A * 295,000 16,066 Certegy 315,000 10,332 First Data 445,000 18,285 Fiserv * 310,000 12,248 SunGard Data Systems * 500,000 13,855 75,787 Semiconductor & Semiconductor Equipment 4.8% Applied Materials * 100,000 2,245 Intel 160,000 5,152 Intersil Holding, Class A 500,000 12,425 Maxim Integrated Products 200,000 9,960 Microchip Technology 135,000 4,504 Novellus Systems * 230,000 9,671 43,957 Software 7.4% Adobe Systems 100,000 3,930 Cadence Design Systems * 300,000 5,394 Intuit * 290,000 15,344 Mercury Interactive * 160,000 7,782 Microsoft 850,000 23,409 Siebel Systems * 400,000 5,548 Symantec * 70,000 2,425 Synopsys * 110,000 3,714 67,546 Total Information Technology 252,596 TELECOMMUNICATION SERVICES 2.7% Wireless Telecommunication Services 2.7% Nextel Communications, Class A * 325,000 9,119 Vodafone ADR 615,000 15,400 Total Telecommunication Services 24,519 Total Miscellaneous Common Stocks 2.9% 26,565 Total Common Stocks (Cost $686,333) 909,202 SHORT-TERM INVESTMENTS 1.3% Money Market Fund 1.3% T. Rowe Price Reserve Investment Fund, 1.13% # 12,294,866 12,295 Total Short-Term Investments (Cost $12,295) 12,295 Total Investments in Securities 100.7% of Net Assets (Cost $698,628) $921,497 -------- (ss.) Denominated in U.S. dollar unless otherwise noted # Seven-day yield * Non-income producing ADR American Depository Receipts The accompanying notes are an integral part of these financial statements. T. Rowe Price New America Growth Fund -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 Statement of Assets and Liabilities -------------------------------------------------------------------------------- ($ 000s) Assets Investments in securities, at value (cost $698,628) $ 921,497 Other assets 1,928 Total assets 923,425 Liabilities Total liabilities 8,393 NET ASSETS $ 915,032 ------------ Net Assets Consist of: Undistributed net realized gain (loss) $ (119,124) Net unrealized gain (loss) 222,869 Paid-in-capital applicable to 30,670,211 shares of no par value capital stock outstanding; unlimited shares authorized 811,287 NET ASSETS $ 915,032 ------------ NET ASSET VALUE PER SHARE $ 29.83 ------------ The accompanying notes are an integral part of these financial statements. T. Rowe Price New America Growth Fund -------------------------------------------------------------------------------- Certified Annual Report Statement of Operations -------------------------------------------------------------------------------- ($ 000s) Year Ended 12/31/03 Investment Income (Loss) Income Dividend $ 5,471 Securities lending 5 Total income 5,476 Expenses Investment management 5,670 Shareholder servicing 2,385 Custody and accounting 130 Prospectus and shareholder reports 80 Registration 39 Legal and audit 16 Trustees 9 Miscellaneous 8 Total expenses 8,337 Net investment income (loss) (2,861) Realized and Unrealized Gain (Loss) Net realized gain (loss) on securities 32,400 Change in net unrealized gain (loss) on securities 228,640 Net realized and unrealized gain (loss) 261,040 INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 258,179 ----------- The accompanying notes are an integral part of these financial statements. T. Rowe Price New America Growth Fund -------------------------------------------------------------------------------- Certified Annual Report Statement of Changes in Net Assets -------------------------------------------------------------------------------- ($ 000s) Year Ended 12/31/03 12/31/02 Increase (Decrease) in Net Assets Operations Net investment income (loss) $ (2,861) $ (3,798) Net realized gain (loss) 32,400 (73,887) Change in net unrealized gain (loss) 228,640 (246,955) Increase (decrease) in net assets from operations 258,179 (324,640) Capital share transactions * Shares sold 110,234 107,979 Shares redeemed (214,424) (205,579) Increase (decrease) in net assets from capital share transactions (104,190) (97,600) Net Assets Increase (decrease) during period 153,989 (422,240) Beginning of period 761,043 1,183,283 End of period $ 915,032 $ 761,043 ---------- ----------- *Share information Shares sold 4,380 4,244 Shares redeemed (8,208) (8,074) Increase (decrease) in shares outstanding (3,828) (3,830) The accompanying notes are an integral part of these financial statements. T. Rowe Price New America Growth Fund -------------------------------------------------------------------------------- Certified Annual Report December 31, 2003 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 (the 1940 Act) as a diversified, open-end management investment company and commenced operations on September 30, 1985. The fund seeks to provide 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 The fund values its investments and computes its net asset value per share at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day that the NYSE is open for business. Equity securities listed or regularly traded on a securities exchange or in the over-the-counter market are valued at the last quoted sale price, or official closing price for certain markets, at the time the valuations are made. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for such security. Listed securities not traded on a particular day are valued at the mean of the latest bid and ask prices for domestic securities and the last quoted sale price for international securities. Investments in mutual funds are valued at the mutual fund's closing net asset value per share on the day of valuation. Other investments and those for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by the T. Rowe Price Valuation Committee, established by the fund's Board of Trustees. Rebates and Credits Subject to best execution, the fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the fund in cash. Commission rebates are included in realized gain on securities in the accompanying financial statements and totaled $75,000 for the year ended December 31, 2003. Additionally, the fund earns credits on temporarily uninvested cash balances at the custodian that reduce the fund's custody charges. Custody expense in the accompanying financial statements is presented before reduction for credits. Investment Transactions, Investment Income, and Distributions Income and expenses are recorded on the accrual basis. Dividends received from mutual fund investments are reflected as dividend income; capital gain distributions are reflected as realized gain/loss. Dividend income and capital gain distributions are recorded on the ex-dividend date. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Distributions to shareholders are recorded on the ex-dividend date. Income distributions are declared and paid on an annual basis. Capital gain distributions, if any, are typically declared and paid on an annual basis. Other In the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is dependent on claims that may be made against the fund in the future and, therefore, cannot be estimated; however, based on experience, the risk of material loss from such claims is considered remote. NOTE 2 - INVESTMENT TRANSACTIONS Consistent with its investment objective, the fund engages in the following practices to manage exposure to certain risks or enhance performance. The investment objective, policies, program, and risk factors of the fund are described more fully in the fund's prospectus and Statement of Additional Information. Securities Lending The fund lends its securities to approved brokers to earn additional income. It receives as collateral cash and U.S. government securities valued at 102% to 105% of the value of the securities on loan. Cash collateral is invested in a money market pooled trust managed by the fund's lending agent in accordance with investment guidelines approved by fund management. Collateral is maintained over the life of the loan in an amount not less than the value of loaned securities, as determined at the close of fund business each day; any additional collateral required due to changes in security values is delivered to the fund the next business day. Although risk is mitigated by the collateral, the fund could experience a delay in recovering its securities and a possible loss of income or value if the borrower fails to return the securities. Securities lending revenue recognized by the fund consists of earnings on invested collateral and borrowing fees, net of any rebates to the borrower and compensation to the lending agent. At December 31, 2003, there were no securities on loan. Other Purchases and sales of portfolio securities, other than short-term securities, aggregated $511,244,000 and $597,191,000, respectively, for the year ended December 31, 2003. NOTE 3 - FEDERAL INCOME TAXES No provision for federal income taxes is required since the fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code and distribute to shareholders all of its taxable income and gains. Federal income tax regulations differ from generally accepted accounting principles; therefore, distributions determined in accordance with tax regulations may differ significantly in amount or character from net investment income and realized gains for financial reporting purposes. Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. There were no distributions in the year ended December 31, 2003. At December 31, 2003, the tax-basis components of net assets were as follows: -------------------------------------------------------------------------------- Unrealized appreciation $ 232,753,000 Unrealized depreciation (9,884,000) Net unrealized appreciation (depreciation) 222,869,000 Capital loss carryforwards (119,124,000) Paid-in capital 811,287,000 Net assets $ 915,032,000 ---------------- The fund intends to retain realized gains to the extent of available capital loss carryforwards for federal income tax purposes. In 2003, the fund utilized $20,809,000 of capital loss carryforwards. As of December 31, 2003, the fund had $42,671,000 of capital loss carryforwards that expire in 2009, and $76,453,000 that expire in 2010. For the year ended December 31, 2003, the fund recorded the following permanent reclassifications to reflect tax character. Reclassifications to paid-in capital relate primarily to the current net operating loss. Results of operations and net assets were not affected by these reclassifications. -------------------------------------------------------------------------------- Undistributed net investment income $ 2,861,000 Paid-in capital (2,861,000) At December 31, 2003, the cost of investments for federal income tax purposes was $698,628,000. NOTE 4 - RELATED PARTY TRANSACTIONS The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. The investment management agreement between the fund and the manager provides for an annual investment management fee, which is computed daily and paid monthly. The fee consists of an individual fund fee, equal to 0.35% of the fund's average daily net assets, and the fund's pro-rata share of a group fee. The group fee is calculated based on the combined net assets of certain mutual funds sponsored by Price Associates (the group) applied to a graduated fee schedule, with rates ranging from 0.48% for the first $1 billion of assets to 0.295% for assets in excess of $120 billion. The fund's portion of the group fee is determined by the ratio of its average daily net assets to those of the group. At December 31, 2003, the effective annual group fee rate was 0.32%, and investment management fee payable totaled $542,000. In addition, the fund has entered into service agreements with Price Associates and two wholly owned subsidiaries of Price Associates (collectively, Price). Price Associates computes the daily share price and maintains the financial records of the fund. T. Rowe Price Services, Inc., provides shareholder and administrative services in its capacity as the fund's transfer and dividend disbursing agent. T. Rowe Price Retirement Plan Services, Inc., provides subaccounting and recordkeeping services for certain retirement accounts invested in the fund. Expenses incurred pursuant to these service agreements totaled $1,859,000 for the year ended December 31, 2003, of which $173,000 was payable at period-end. The fund may invest in the T. Rowe Price Reserve Investment Fund and the T. Rowe Price Government Reserve Investment Fund (collectively, the Reserve Funds), open-end management investment companies managed by Price Associates. The Reserve Funds are offered as cash management options only to mutual funds, trusts, and other accounts managed by Price Associates and/or its affiliates, and are not available to the public. The Reserve Funds pay no investment management fees. During the year ended December 31, 2003, dividend income from the Reserve Funds totaled $151,000. T. Rowe Price New America Growth Fund -------------------------------------------------------------------------------- Certified Annual Report Report of Independent Auditors -------------------------------------------------------------------------------- To the Board of Trustees and Shareholders of T. Rowe Price New America Growth Fund In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of T. Rowe Price New America Growth Fund (the "Fund") at December 31, 2003, 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, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Baltimore, Maryland January 26, 2004 T. Rowe Price New America Growth Fund -------------------------------------------------------------------------------- Certified Annual Report Information on Proxy Voting -------------------------------------------------------------------------------- A description of the policies and procedures that the T. Rowe Price New America Growth Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge, upon request by calling 1-800-225-5132. It also appears in the fund's Statement of Additional Information (Form 485B), which can be found on the SEC's Web site, www.sec.gov. T. Rowe Price New America Growth Fund -------------------------------------------------------------------------------- Certified Annual Report About the Fund's Trustees and Officers -------------------------------------------------------------------------------- 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. (T. Rowe Price); "inside" 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. The Statement of Additional Information includes additional information about the fund trustees and is available without charge by calling a T. Rowe Price representative at 1-800-225-5132. 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, (1/28/45) and Chief Executive Officer, The Rouse Company, 2001 real estate developers; Director, Mercantile Bank (4/03 to present) Donald W. Dick, Jr. Principal, EuroCapital Advisors, LLC, (1/27/43) an acquisition and management advisory firm 1985 David K. Fagin Director, Golden Star Resources Ltd., Canyon (4/9/38) Resources Corp. (5/00 to present), and 1994 Pacific Rim Mining Corp. (2/02 to present); Chairman and President, Nye Corp. Karen N. Horn Managing Director and President, Global Private (9/21/43) Client Services, Marsh Inc.; Managing Director 2003 and Head of International Private Banking, Bankers Trust; Director, Eli Lilly and Company F. Pierce Linaweaver President, F. Pierce Linaweaver & Associates, (8/22/34) Inc., consulting environmental and civil engineers 2001 John G. Schreiber Owner/President, Centaur Capital Partners, Inc., (10/21/46) a real estate investment company; Senior Advisor 2001 and 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., (8/2/33) a private investment company 1994 Paul M. Wythes ** Founding Partner, Sutter Hill Ventures, a (6/23/33) venture capital limited partnership, 1985 providing equity capital to young high-technology companies throughout the United States; Director, Teltone Corp. * Each independent trustee oversees 107 T. Rowe Price portfolios and serves until retirement, resignation, or election of a successor. ** Retired from Board of Trustees effective December 31, 2003. Inside Trustees Name (Date of Birth) Year Elected * [Number of T. Rowe Price Principal Occupation(s) During Past 5 Years Portfolios Overseen] and Directorships of Other Public Companies John H. Laporte, CFA Director and Vice President, T. Rowe Price (7/26/45) Group, Inc.; Vice President, T. Rowe Price; 1985 Vice 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 [107] of the Board and Director, T. Rowe Price Global Asset Management Limited, T. Rowe Price Global Investment Services Limited, T. Rowe Price Investment Services, Inc., T. Rowe Price Retirement Plan Services, Inc., and T. Rowe Price Services, Inc.; Chairman of the Board, Director, President, and Trust Officer, T. Rowe Price Trust Company; Director, T. Rowe Price International, Inc.; Chairman of the Board, New America Growth Fund M. David Testa, CFA, CIC Chief Investment Officer, Director, and Vice (4/22/44) President, T. Rowe Price; Vice Chairman of the 1997 Board, Chief Investment Officer, Director, and [107] Vice President, T. Rowe Price Group, Inc.; Chairman of the Board and Director, T. Rowe Price International, Inc.; Director, T. Rowe Price Global Asset Management Limited and T. Rowe Price Global Investment Services Limited; Director and Vice President, T. Rowe Price Trust Company * Each inside trustee serves until retirement, resignation, or election of a successor. Officers Name (Date of Birth) Title and Fund(s) Served Principal Occupation(s) Jeffrey A. Arricale, CPA (4/11/71) Vice President, T. Rowe Price; formerly Vice President, New America Manager, Assurance, KPMG LLP (to 1999); Growth Fund student, The Wharton School, University of Pennsylvania (to 2001) R. Scott Berg (2/20/72) Employee, T. Rowe Price; formerly Vice President, New America student, Standford Graduate School of Growth Fund Business (to 2002); Intern, T. Rowe Price (to 2001); Financial Analysis and Planning Manager, Mead Consumer & Office Products (to 2000) Unless otherwise noted, officers have been employees of T. Rowe Price or T. Rowe Price International for at least five years. Officers (continued) Name (Date of Birth) Title and Fund(s) Served Principal Occupation(s) Brian W.H. Berghuis, CFA (10/12/58) Vice President, T. Rowe Price and Vice President, New America T. Rowe Price Group, Inc. Growth Fund Stephen V. Booth (6/21/61) Vice President, T. Rowe Price, T. Rowe Vice President, New America Price Group, Inc., and T. Rowe Price Growth Fund Trust Company Joseph A. Carrier (12/30/60) Vice President, T. Rowe Price, T. Rowe Treasurer, New America Growth Fund Price Group, Inc., and T. Rowe Price Investment Services, Inc. Roger L. Fiery III, CPA (2/10/59) Vice President, T. Rowe Price, T. Rowe Vice President, New America Price Group, Inc., T. Rowe Price Growth Fund International, Inc., and T. Rowe Price Trust Company Henry H. Hopkins (12/23/42) Director and Vice President, T. Rowe Vice President, New America Price Group, Inc., T. Rowe Price Growth Fund Investment 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. Christopher R. Leonard, CFA (1/11/73) Vice President, T. Rowe Price and Vice President, New America T. Rowe Price Group, Inc. Growth Fund Patricia B. Lippert (1/12/53) Assistant Vice President, T. Rowe Price Secretary, New America Growth Fund and T. Rowe Price Investment Services, Inc. Robert J. Marcotte (3/6/62) Vice President, T. Rowe Price and Vice President, New America T. Rowe Price Group, Inc. Growth Fund Joseph M. Milano, CFA (9/14/72) Vice President, T. Rowe Price and Executive Vice President, New America T. Rowe Price Group, Inc. Growth Fund Charles G. Pepin (4/23/66) Vice President, T. Rowe Price and Vice President, New America T. Rowe Price Group, Inc. Growth Fund Robert W. Sharps, CFA, CPA (6/10/71) Vice President, T. Rowe Price and Vice President, New America T. Rowe Price Group, Inc. Growth Fund Robert W. Smith (4/11/61) Vice President, T. Rowe Price, T. Rowe President, New America Growth Fund Price Group, Inc., and T. Rowe Price International, Inc. Julie L. Waples (5/12/70) Vice President, T. Rowe Price Vice President, New America Growth Fund R. Candler Young (9/28/71) Vice President, T. Rowe Price and T. Vice President, New America Rowe Price Group, Inc; formerly Growth Fund Investment Banking 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. Item 2. Code of Ethics. As of the end of the period covered by this report, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, applicable to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of ethics is filed as an exhibit to this Form N-CSR. No substantive amendments were approved or waivers were granted to this code of ethics during the period covered by this report. Item 3. Audit Committee Financial Expert. The registrant's Board of Directors/Trustees has determined that Mr. David K. Fagin qualifies as an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Fagin is considered independent for purposes of Item 3 of Form N-CSR. Item 4. Principal Accountant Fees and Services. (a) - (d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant's principal accountant were as follows: 2003 2002 Audit Fees $9,699 $9,810 Audit-Related Fees 546 -- Tax Fees 2,519 2,375 All Other Fees 124 162 Audit fees include amounts related to the audit of the registrant's annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. Audit-related fees include amounts reasonably related to the performance of the audit of the registrant's financial statements, specifically the issuance of a report on internal controls. Tax fees include amounts related to tax compliance, tax planning, and tax advice. Other fees include the registrant's pro-rata share of amounts for agreed-upon procedures in conjunction with service contract approvals by the registrant's Board of Directors/Trustees. (e)(1) The registrant's audit committee has adopted a policy whereby audit and non-audit services performed by the registrant's principal accountant for the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant require pre-approval in advance at regularly scheduled audit committee meetings. If such a service is required between regularly scheduled audit committee meetings, pre-approval may be authorized by one audit committee member with ratification at the next scheduled audit committee meeting. Waiver of pre-approval for audit or non-audit services requiring fees of a de minimis amount is not permitted. (2) No services included in (b) - (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) Not applicable. (g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant's principal accountant for non-audit services rendered to the registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant were $719,000 and $671,000, respectively, and were less than the aggregate fees billed for those same periods by the registrant's principal accountant for audit services rendered to the T. Rowe Price Funds. (h) All non-audit services rendered in (g) above were pre-approved by the registrant's audit committee. Accordingly, these services were considered by the registrant's audit committee in maintaining the principal accountant's independence. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. [Reserved] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 9. Controls and Procedures. (a) The registrant's principal executive officer and principal financial officer have evaluated the registrant's disclosure controls and procedures within 90 days of this filing and have concluded that the registrant's disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely. (b) The registrant's principal executive officer and principal financial officer are aware of no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10. Exhibits. (a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is attached. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached. (b) A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. T. Rowe Price New America Growth Fund By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date February 13, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ James S. Riepe James S. Riepe Principal Executive Officer Date February 13, 2004 By /s/ Joseph A. Carrier Joseph A. Carrier Principal Financial Officer Date February 13, 2004