0000950109-95-002858.txt : 19950802 0000950109-95-002858.hdr.sgml : 19950802 ACCESSION NUMBER: 0000950109-95-002858 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950801 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE NEW AMERICA GROWTH FUND CENTRAL INDEX KEY: 0000773485 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04358 FILM NUMBER: 95557858 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 3015472000 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE COMMON STOCK FUND DATE OF NAME CHANGE: 19851003 N-30D 1 NEW AMERICA GROWTH FUND -------------------------------------------------------------------------------- Fellow Shareholders -------------------------------------------------------------------------------- Stocks rose sharply in the second quarter, paced by technology issues, and all of the major market indices ended the period at record levels. Your fund's gains for the quarter and first half were also impressive. Returns were just shy of the broad market, represented by the unmanaged Standard & Poor's 500 Stock Index, but were close to the average growth mutual fund for the quarter and exceeded this benchmark on a year-to-date basis. Neither your fund nor most other stock indices surpassed the technology-dominated Nasdaq Composite Index. -------------------------------------------------------------------------------- Performance Comparison --------------------------------------------------------------------------------
Periods Ended 6/30/95 3 Months 6 Months --------------------- New America Growth Fund 9.0% 19.7% S&P 500 Index 9.6 20.2 Nasdaq Composite* 14.2 24.1 Lipper Growth Fund Avg. 9.3 17.5 --------------------------------------------------------------------------------
*Principal only MARKET ENVIRONMENT The stock market's superb performance in the first half may seem surprising. After all, in 1994, when the economy was growing briskly and corporate earnings gains were the best in several years, stocks meandered and finished virtually unchanged. However, the market has taken off this year despite abundant evidence of a pullback in growth and increasing signs of a slowdown in corporate earnings, particularly in the consumer sector. We believe the market has been driven by lower interest rates and a changing perception of both the role and direction of American government. Slowing growth in the U.S. and abroad has assuaged fears of a pickup in inflation. Long-term interest rates, whose surge in 1994 precipitated the worst bond returns in many years, decisively reversed course and fell about 2 percentage points from their peaks last year. Investors were further comforted by hints from the Federal Reserve early in the year that the tightening phase of monetary policy was over; indeed, in July, the Fed cut rates for the first time in three years. This action improved prospects for a "soft landing," and the markets seemed to be expecting the best of all possible worlds -- moderate, noninflationary growth. Perhaps the most important, albeit subtle, catalyst for the market's performance has come from Washington, where a Republican Congress appears to have transformed the nation's political agenda. In fact, the concept of a diminished role for government and the movement toward fiscal conservatism have gained advocates in both parties. Even the Democratic president has proposed slowing the growth of government services to attain a balanced budget in 10 years. Technology stocks led the market's advance, while stocks of companies in cyclical industries such as autos and steel lagged. Investor focus continued to shift from the cyclicals that led the market through mid-1994 toward companies whose earnings are expected to grow at rates of 15% to 25%, even in a slowing economy. These are the types of companies your fund favors. PORTFOLIO REVIEW Your fund seeks high-growth companies operating in noncyclical, service businesses. The service sector of the U.S. economy has grown rapidly since World War II and is now much larger than the manufacturing sector. Most manufacturing industries have pronounced cyclical characteristics; in contrast, service sector gross domestic product has not declined in any year since 1947. Media reports often misrepresent the service sector as the haven of burger-flipping teenagers, when, in fact, it has created far more high-paying jobs than the manufacturing sector. Of greater importance to fund shareholders, the service sector has spawned many of the fastest-growing, most exciting companies in America today. After paring our consumer-related stocks and augmenting our business services holdings in 1994, we made few changes in the fund's overall sector diversification so far in 1995, as shown below: -------------------------------------------------------------------------------- Sector Diversification --------------------------------------------------------------------------------
12/31/94 6/30/95 -------- ------- Financial Services 12% 11% Consumer Services 41 41 Business Services 43 45 Reserves 4 3 -------- ------- Total 100% 100% --------------------------------------------------------------------------------
Within the sectors, however, there were significant investment changes. Major additions in the first half included the purchase of two cable companies, COMCAST and COX COMMUNICATIONS. We felt that negative investor sentiment toward the stocks was overdone, and that the growth prospects of these two operators, in particular, were strong. We also established sizable positions in OLSTEN, a temporary staffing company that is growing quickly in the home health care field, and in ADT, a company with strong growth prospects in two attractive businesses, security systems and wholesale used auto auctions. We also eliminated two major, longtime holdings: TOYS "R" US, whose earnings growth rate, we believe, is slowing, and CHARLES SCHWAB, a financial services company whose stock reached a valuation level we considered excessive. The fund's top contributor in the first half was CUC INTERNATIONAL, the nation's largest purveyor of direct mail, membership-based discount shopping services, which continued to post outstanding results. Several computer processing companies were also among the top contributors to the fund, including FIRST FINANCIAL MANAGEMENT, a leader in credit card transaction processing, SUNGARD DATA SYSTEMS, the largest data recovery provider, and PAYCHEX, a payroll processor. Several retailers, including GENERAL NUTRITION, MICRO WAREHOUSE, and CIRCUIT CITY STORES, bucked the negative retailing environment to land in the top 10 for the second quarter. Several of our holdings fell victim to the slowdown in the consumer sector, however. ANNTAYLOR STORES, a women's apparel retailer, and SBARRO, the Italian restaurant chain, both reported disappointing earnings and were among the worst contributors for both the second quarter and the first half. Our holdings in health maintenance organizations (HMOs) PACIFICARE HEALTH SYSTEMS, UNITED HEALTHCARE, and FOUNDATION HEALTH also penalized the fund in the quarter as investors reacted to a perceived deterioration in their pricing environment. We have reduced our exposure to HMOs, but expect to retain the premier operators and may add selectively to our positions if selling appears overdone. The portfolio's characteristics remain vibrant, as shown below. We continue to search for highly profitable, rapidly growing companies with excellent managements and strong competitive positions in businesses that we like. We favor companies that generate substantial positive cash flows, have strong financial positions, and can finance their own growth. We look for companies we can own for a number of years. -------------------------------------------------------------------------------- Financial Comparison --------------------------------------------------------------------------------
New America Growth Fund S&P 500 ----------- ------- Earnings Growth Rate Estimated Next 5 Years 21.4% 7.0% Profitability-Return on Equity Latest 12 Months 17.2% 16.0% Dividend Yield on Stocks 0.5% 2.5% P/E Ratio (based on next 12 months' estimated earnings) 18.3x 15.2x --------------------------------------------------------------------------------
2 OUTLOOK We expect modest economic growth in the second half of the year. Soft landings are unusual, but we are optimistic the economy will achieve a respectable, sustainable growth rate. We do worry, however, that this comfortable scenario could be shattered by an unanticipated event or systemic shock. Nevertheless, most of the companies in your fund should continue to grow even in difficult economic times. Interest rates have already fallen dramatically from their peaks, and we do not expect them to fall much further. In the absence of strong evidence of a faltering economy, we think the Federal Reserve will be cautious about lowering rates again soon, and may become increasingly wary of fueling further speculation in the financial markets. While speculation has been apparent in some market sectors, particularly technology (to which your fund has only modest exposure), we continue to believe that most growth stocks remain reasonably priced relative to the market. Your fund should be well positioned to achieve attractive returns over the next several years. Respectfully submitted, /s/ John H. Laporte John H. Laporte President and Chairman of the Investment Advisory Committee /s/ Brian W. H. Berghuis Brian W. H. Berghuis Executive Vice President July 21, 1995 -------------------------------------------------------------------------------- Foreign Stock Authorization Increased -------------------------------------------------------------------------------- The Board of Trustees of the New America Growth Fund has increased the amount of fund assets that can be invested in foreign securities from 10% to 15%. While the fund typically has modest foreign exposure (currently 8.5% of total assets), the greater flexibility could be advantageous in the future because of the proliferation of suitable overseas investment opportunities, the increase in foreign companies with operations in the U.S., and the opening up of financial markets in areas of the world previously closed to investment. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Twenty-Five Largest Holdings -------------------------------------------------------------------------------- June 30, 1995
Percent of Company Net Assets -------------------------------------------------------------------- ---------- CUC International 4.3% -------------------------------------------------------------------------------- First Financial Management 3.0 -------------------------------------------------------------------------------- Vodafone 2.9 -------------------------------------------------------------------------------- Comcast 2.7 -------------------------------------------------------------------------------- Viacom 2.6 -------------------------------------------------------------------------------- SunGard Data Systems 2.6 -------------------------------------------------------------------------------- United HealthCare 2.5 -------------------------------------------------------------------------------- Paychex 2.4 -------------------------------------------------------------------------------- MGIC Investment 2.3 -------------------------------------------------------------------------------- Paging Network 2.2 -------------------------------------------------------------------------------- Office Depot 2.2 -------------------------------------------------------------------------------- Alco Standard 2.2 -------------------------------------------------------------------------------- Catalina Marketing 2.1 -------------------------------------------------------------------------------- Circuit City Stores 2.0 -------------------------------------------------------------------------------- Franklin Resources 2.0 -------------------------------------------------------------------------------- Columbia/HCA Healthcare 2.0 -------------------------------------------------------------------------------- Sanifill 1.9 -------------------------------------------------------------------------------- Cardinal Health 1.8 -------------------------------------------------------------------------------- Schlumberger 1.8 -------------------------------------------------------------------------------- Hospitality Franchise 1.8 -------------------------------------------------------------------------------- ADVO 1.7 -------------------------------------------------------------------------------- Olsten 1.7 -------------------------------------------------------------------------------- ADT 1.7 -------------------------------------------------------------------------------- Cox Communications 1.6 -------------------------------------------------------------------------------- General Nutrition 1.6 -------------------------------------------------------------------------------- Total 55.6% --------------------------------------------------------------------------------
3 -------------------------------------------------------------------------------- Contributions to the Change in Net Asset Value Per Share -------------------------------------------------------------------------------- T. Rowe Price New America Growth Fund Three Months Ended June 30, 1995 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- TEN BEST CONTRIBUTORS -------------------------------------------------------------------------------- First Financial Management 14c -------------------------------------------------------------------------------- Comcast 12 -------------------------------------------------------------------------------- Sanifill 12 -------------------------------------------------------------------------------- General Nutrition 12 -------------------------------------------------------------------------------- Micro Warehouse 12 -------------------------------------------------------------------------------- Paychex 12 -------------------------------------------------------------------------------- Vodafone 12 -------------------------------------------------------------------------------- ALC Communications 10 -------------------------------------------------------------------------------- Circuit City Stores 10 -------------------------------------------------------------------------------- CUC International 10 -------------------------------------------------------------------------------- Total 116c -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- TEN WORST CONTRIBUTORS -------------------------------------------------------------------------------- AnnTaylor Stores** -17c -------------------------------------------------------------------------------- Sbarro 10 -------------------------------------------------------------------------------- PacifiCare Health Systems 10 -------------------------------------------------------------------------------- United HealthCare 9 -------------------------------------------------------------------------------- Foundation Health 8 -------------------------------------------------------------------------------- Pittston Services** 4 -------------------------------------------------------------------------------- Danka Business Systems 3 -------------------------------------------------------------------------------- ADVO 3 -------------------------------------------------------------------------------- HEALTHSOUTH Rehabilitation 2 -------------------------------------------------------------------------------- Patterson Dental 2 -------------------------------------------------------------------------------- Total -68c --------------------------------------------------------------------------------
**Position eliminated -------------------------------------------------------------------------------- Average Annual Compound Total Return -------------------------------------------------------------------------------- Periods Ended June 30, 1995
Since Inception 1 Year 5 Years 9/30/85 ------ ------- --------- 23.02% 14.19% 15.55% --------------------------------------------------------------------------------
Investment return and principal value represent past performance and will vary. Shares may be worth more or less at redemption than at original purchase. Six Months Ended June 30, 1995 --------------------------------------------------------------------------------
-------------------------------------------------------------------------------- TEN BEST CONTRIBUTORS -------------------------------------------------------------------------------- CUC International 29c -------------------------------------------------------------------------------- First Financial Management 26 -------------------------------------------------------------------------------- SunGard Data Systems 20 -------------------------------------------------------------------------------- MGIC Investment 20 -------------------------------------------------------------------------------- Paychex 19 -------------------------------------------------------------------------------- Circuit City Stores* 18 -------------------------------------------------------------------------------- Alco Standard 15 -------------------------------------------------------------------------------- Comcast* 14 -------------------------------------------------------------------------------- ALC Communications 13 -------------------------------------------------------------------------------- Money Store 12 -------------------------------------------------------------------------------- Total 186c -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- TEN WORST CONTRIBUTORS -------------------------------------------------------------------------------- AnnTaylor Stores** -10c -------------------------------------------------------------------------------- PacifiCare Health Systems* 9 -------------------------------------------------------------------------------- Sbarro 6 -------------------------------------------------------------------------------- United HealthCare 6 -------------------------------------------------------------------------------- Autotote** 6 -------------------------------------------------------------------------------- Toys "R" Us** 6 -------------------------------------------------------------------------------- Foundation Health 4 -------------------------------------------------------------------------------- Pittston Services** 2 -------------------------------------------------------------------------------- Catalina Marketing 2 -------------------------------------------------------------------------------- President Casinos** 2 -------------------------------------------------------------------------------- Total -53c --------------------------------------------------------------------------------
* Position added ** Position eliminated 4 -------------------------------------------------------------------------------- Statement of Net Assets T. Rowe Price New America Growth Fund / June 30, 1995 (Unaudited) -------------------------------------------------------------------------------- (values in thousands)
-------------------------------------------------------------------------------- Common Stocks & Rights -- 97.5% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FINANCIAL SERVICES -- 11.1% -------------------------------------------------------------------------------- Value BANK & TRUST -- 1.6% 220,000 shs. BANC ONE.................................... $ 7,095 150,000 State Street Boston......................... 5,531 12,626 INSURANCE -- 3.7% 53,500 CMAC Investment............................. 2,321 375,000 MGIC Investment............................. 17,578 200,000 PMI Group................................... 8,675 28,574 INVESTMENT SERVICES -- 2.0% 350,000 Franklin Resources.......................... 15,575 OTHER FINANCIAL SERVICES -- 3.8% 75,000 Fannie Mae.................................. 7,078 120,000 Freddie Mac................................. 8,250 333,333 Mercury Finance............................. 6,417 200,000 Money Store................................. 7,175 28,920 TOTAL FINANCIAL SERVICES 85,695 -------------------------------------------------------------------------------- CONSUMER SERVICES -- 40.8% -------------------------------------------------------------------------------- RETAILING/SPECIALTY MERCHANDISERS -- 12.9% 500,000 Circuit City Stores......................... 15,812 431,300 *Cole National (Class A)..................... 4,475 350,000 Dollar General.............................. 11,069 343,000 *General Nutrition........................... 11,962 300,000 *Jones Apparel Group......................... 8,963 195,000 *Kohl's...................................... 8,897 93,500 *Little Switzerland.......................... 403 28,700 *Nautica Enterprises......................... 1,033 600,000 *Office Depot................................ 16,875 99,500 Phillips-Van Heusen......................... 1,542 350,000 *Revco....................................... 8,400 350,000 *Tommy Hilfiger.............................. 9,800 99,231 ENTERTAINMENT & LEISURE -- 3.9% 100,000 *Harrah's Entertainment...................... 2,800 120,000 *International Family Entertainment (Class B).................. 1,890 150,000 *Mirage Resorts.............................. 4,594 50,000 *Promus Hotel................................ 1,100 48,000 *Viacom (Class A)............................ 2,232 363,690 shs. *Viacom (Class B)............................ 16,866 600,000 rts.* Viacom...................................... 900 30,382 MEDIA/COMMUNICATION SERVICES -- 13.5% 241,000shs. *ALC Communications.......................... 10,875 150,000 *America Online.............................. 6,563 240,000 *CellStar.................................... 5,550 806,300 Comcast (Class A Special)................... 14,967 313,700 Comcast (Class A)........................... 5,725 648,900 *Cox Communications (Class A)................................ 12,572 300,000 *Mobile Telecommunication Technologies............................. 8,194 510,000 *Paging Network.............................. 17,340 600,000 Vodafone ADR................................ 22,725 104,511 RESTAURANTS/FOOD DISTRIBUTION -- 4.1% 175,000 *Lone Star Steakhouse & Saloon................................. 5,294 300,000 *Outback Steakhouse.......................... 8,700 450,000 Sbarro...................................... 10,462 205,200 *Starbucks................................... 7,285 31,741 PERSONAL SERVICES -- 6.4% 791,531 *CUC International........................... 33,244 103,100 H&R Block................................... 4,240 332,200 Loewen Group................................ 11,793 49,277 TOTAL CONSUMER SERVICES 315,142 -------------------------------------------------------------------------------- BUSINESS SERVICES -- 44.5% -------------------------------------------------------------------------------- HEALTH CARE SERVICES -- 8.0% 350,000 Columbia/HCA Healthcare..................... 15,138 50,000 *Foundation Health........................... 1,350 184,700 *Genesis Health Ventures..................... 5,472 200,086 *HEALTHSOUTH Rehabilitation........................... 3,476 200,000 *PacifiCare Health Systems (Class B)................................ 10,175 300,000 *Quorum Health Group......................... 6,019 475,000 United HealthCare........................... 19,653 61,283 DISTRIBUTION SERVICES -- 6.3% 208,300 Alco Standard............................... 16,638 300,000 Cardinal Health............................. 14,175 330,100 Danka Business Systems ADR.................. 8,005 410,000 *Patterson Dental............................ 9,686 48,504
5 -------------------------------------------------------------------------------- T. Rowe Price New America Growth Fund / Statement of Net Assets (Unaudited) -------------------------------------------------------------------------------- COMPUTER SERVICES -- 8.9% 368,000 shs. *BISYS Group................................. $ 8,142 300,000 *Ceridian.................................... 11,063 275,000 First Financial Management.................. 23,512 225,000 *FIserv...................................... 6,286 375,000 *SunGard Data Systems........................ 19,687 68,690 ENVIRONMENTAL SERVICES -- 2.8% 200,000 Browning-Ferris............................. 7,225 458,900 *Sanifill.................................... 14,398 21,623 ENERGY SERVICES -- 4.8% 325,000 *BJ Services................................. 7,394 300,000 Camco International......................... 7,012 95,000 *Enterra..................................... 1,995 225,000 Schlumberger................................ 13,978 400,000 *Smith International......................... 6,700 37,079 OTHER BUSINESS SERVICES -- 13.7% 1,100,000 *ADT......................................... 12,925 700,000 ADVO........................................ 13,213 300,000 *Catalina Marketing.......................... 16,087 150 *Corporate Express........................... 3 25,000 *Creative Computers.......................... 669 188,000 *DIMAC....................................... 2,914 400,000 *Hospitality Franchise....................... 13,850 200,000 *Micro Warehouse............................. 9,225 400,000 Olsten...................................... 13,100 506,250 Paychex..................................... 18,478 150,000 *Viking Office Products...................... 5,494 105,958 TOTAL BUSINESS SERVICES 343,137 MISCELLANEOUS COMMON STOCKS -- 1.1% 8,200 TOTAL COMMON STOCKS & RIGHTS (COST $523,145) 752,174 -------------------------------------------------------------------------------- Short-Term Investments -- 1.7% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- BANK NOTES -- 0.4% -------------------------------------------------------------------------------- $3,000,000 Fifth Third Bank, 6.21%, 10/27/95................................. $ 3,001 -------------------------------------------------------------------------------- COMMERCIAL PAPER -- 0.7% -------------------------------------------------------------------------------- 121,000 Cargill Inc., 6.10%, 7/3/95................. 121 5,000,000 Countrywide Funding, 6.00%, 7/18/95.................................. 4,978 5,099 -------------------------------------------------------------------------------- CERTIFICATES OF DEPOSIT -- 0.6% -------------------------------------------------------------------------------- 5,000,000 LandesBank Hessen Thurin, 6.02%, 8/9/95............................ 5,000 TOTAL SHORT-TERM INVESTMENTS (COST $13,100) 13,100 -------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES -- 99.2% OF NET ASSETS (COST $536,245).......................................... 765,274 -------------------------------------------------------------------------------- Other Assets Less Liabilities....................................... 6,463 -------- NET ASSETS CONSIST OF: Value -------- Accumulated net investment income - net of distributions............. $ (1,603) Accumulated net realized gain/loss - net of distributions.......... 18,929 Net unrealized gain (loss).................. 229,029 Paid-in-capital applicable to 25,372,039 shares of no par value capital stock outstanding; unlimited number of shares authorized................................ 525,382 -------- NET ASSETS.......................................................... $771,737 ======== NET ASSET VALUE PER SHARE........................................... $30.42 ====== --------------------------------------------------------------------------------
*Non-income producing The accompanying notes are an integral part of these financial statements. 6 -------------------------------------------------------------------------------- Statement of Operations -------------------------------------------------------------------------------- T. Rowe Price New America Growth Fund / Six Months Ended June 30, 1995 (Unaudited) (in thousands) INVESTMENT INCOME Income Dividend.......................................................... $ 1,324 Interest.......................................................... 868 -------- Total income...................................................... 2,192 -------- Expenses Investment management............................................. 2,395 Shareholder servicing............................................. 1,167 Custody and accounting............................................ 78 Registration...................................................... 55 Prospectus and shareholder reports................................ 50 Legal and audit................................................... 15 Directors......................................................... 10 Miscellaneous..................................................... 25 -------- Total expenses.................................................... 3,795 -------- Net investment income................................................ (1,603) -------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on securities............................... 18,195 Change in net unrealized gain or loss on securities.................. 110,950 -------- Net realized and unrealized gain (loss).............................. 129,145 -------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS.................... $127,542 ========
-------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. 7 -------------------------------------------------------------------------------- Statement of Changes in Net Assets -------------------------------------------------------------------------------- T. Rowe Price New America Growth Fund (Unaudited) (in thousands)
Six Months Ended Year Ended June 30, 1995 Dec. 31, 1994 ---------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM Operations Net investment income....................................................... $ (1,603) $ (1,681) Net realized gain (loss).................................................... 18,195 13,346 Change in net unrealized gain or loss....................................... 110,950 (61,025) -------- -------- Increase (decrease) in net assets from operations........................... 127,542 (49,360) -------- -------- Distributions to shareholders Net realized gain........................................................... -- (13,216) -------- -------- Capital share transactions* Shares sold................................................................. 94,451 232,076 Distributions reinvested.................................................... -- 12,762 Shares redeemed............................................................. (96,402) (155,234) -------- -------- Increase (decrease) in net assets from capital share transactions........... (1,951) 89,604 -------- -------- Increase (decrease) in net assets.............................................. 125,591 27,028 NET ASSETS Beginning of period............................................................ 646,146 619,118 -------- -------- End of period.................................................................. $771,737 $646,146 ======== ======== ---------------------------------------------------------------------------------------------------------------------- *Share information Shares sold................................................................. 3,452 8,663 Distributions reinvested.................................................... -- 508 Shares redeemed............................................................. (3,500) (5,834) -------- -------- Increase (decrease) in shares outstanding................................... (48) 3,337 ======== ======== ----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 8 -------------------------------------------------------------------------------- Notes To Financial Statements -------------------------------------------------------------------------------- T. Rowe Price New America Growth Fund / June 30, 1995 (Unaudited) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES T. Rowe Price New America Growth Fund (the fund) is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. A) Valuation - Equity securities listed or regularly traded on a securities exchange are valued at the last quoted sales price at the time the valuations are made. A security which 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 that are not traded on a particular day and securities that are regularly traded in the over-the-counter market are valued at the mean of the latest bid and asked prices. Short-term debt securities are valued at their cost which, when combined with accrued interest, approximates fair value. 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. B) 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 an identified cost basis. Dividend income and distributions to shareholders are recorded by the fund on the ex-dividend date. Income and capital gain distributions are determined in accordance with federal income tax regulations and may differ from those determined in accordance with generally accepted accounting principles. NOTE 2 - INVESTMENT TRANSACTIONS Purchases and sales of portfolio securities, other than short-term securities, aggregated $245,062,000 and $242,642,000, respectively, for the six months ended June 30, 1995. 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 all of its taxable income. At June 30, 1995, the aggregate cost of investments for federal income tax and financial reporting purposes was $536,245,000 and net unrealized gain aggregated $229,029,000, of which $236,094,000 related to appreciated investments and $7,065,000 to depreciated investments. NOTE 4 - RELATED PARTY TRANSACTIONS The investment management agreement between the fund and T. Rowe Price Associates, Inc. (the Manager) provides for an annual investment management fee, of which $429,000 was payable at June 30, 1995. The fee is computed daily and paid monthly, and consists of an Individual Fund Fee equal to 0.35% of average daily net assets and a Group Fee. The Group Fee is based on the combined assets of certain mutual funds sponsored by the Manager or Rowe-Price Fleming International, Inc. (the Group). The Group Fee rate ranges from 0.48% for the first $1 billion of assets to 0.31% for assets in excess of $34 billion. At June 30, 1995, and for the six months then ended, the effective annual Group Fee rate was 0.34%. The fund pays a pro rata share of the Group Fee based on the ratio of its net assets to those of the Group. In addition, the fund has entered into agreements with the Manager and two wholly owned subsidiaries of the Manager, pursuant to which the fund receives certain other services. The Manager computes the daily share price and maintains the financial records of the fund. T. Rowe Price Services, Inc. is the fund's transfer and dividend disbursing agent and provides shareholder and administrative services to the fund. T. Rowe Price Retirement Plan Services, Inc. provides subaccounting and recordkeeping services for certain retirement accounts invested in the fund. The fund incurred expenses pursuant to these related party agreements totaling approximately $1,030,000 for the six months ended June 30, 1995, of which $203,000 was payable at period-end. 9 -------------------------------------------------------------------------------- Financial Highlights -------------------------------------------------------------------------------- T. Rowe Price New America Growth Fund (Unaudited)
For a share outstanding throughout each period --------------------------------------------------------------------------------- Six Months Year Ended December 31, Ended ----------------------------------------------------------------- June 30, 1995 1994 1993 1992 1991 1990 --------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD.............................. $25.42 $28.04 $24.86 $22.79 $14.66 $16.90 ------ ------ ------ ------ ------ ------ Investment Activities Net investment income.................. (0.06) (0.07) (0.08) (0.04) (0.02) 0.13* Net realized and unrealized gain (loss)......................... 5.06 (2.02) 4.39 2.29 9.02 (2.20) ------ ------ ------ ------ ------ ------ Total from Investment Activities....... 5.00 (2.09) 4.31 2.25 9.00 (2.07) ------ ------ ------ ------ ------ ------ Distributions Net investment income.................. -- -- -- -- -- (0.17) Net realized gain...................... -- (0.53) (1.13) (0.18) (0.87) -- ------ ------ ------ ------ ------ ------ Total Distributions.................... -- (0.53) (1.13) (0.18) (0.87) (0.17) ------ ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD............ $30.42 $25.42 $28.04 $24.86 $22.79 $14.66 ====== ====== ====== ====== ====== ====== ------------------------------------------------------------------------------------------------------------------------------- RATIOS / SUPPLEMENTAL DATA Total Return.............................. 19.7% (7.4)% 17.4% 9.9% 61.9% (12.2)%* Ratio of Expenses to Average Net Assets............................. 1.09%+ 1.14% 1.23% 1.25% 1.25% 1.25%* Ratio of Net Investment Income to Average Net Assets.................. (0.46)%+ (0.27)% (0.39)% (0.44)% (0.12)% 0.81%* Portfolio Turnover Rate................... 72.5%+ 31.0% 43.7% 26.4% 42.3% 41.7% Net Assets, End of Period (in thousands)......................... $771,737 $646,146 $619,118 $480,229 $231,729 $95,697 -------------------------------------------------------------------------------------------------------------------------------
+ Annualized. * Excludes expenses in excess of a 1.25% voluntary expense limitation in effect through December 31, 1993. The accompanying notes are an integral part of these financial statements. 10 -------------------------------------------------------------------------------- Shareholder Services -------------------------------------------------------------------------------- To help shareholder monitor their current investments and make decisions that accurately reflect their financial goals, T. Rowe Price offers a wide variety of information and services--at no extra cost. Knowledgeable Service Representatives By Phone--Shareholder service representatives are available from 8:00 a.m. to 10:00 p.m., Monday - Friday, and weekends from 9:00 a.m. to 5:00 p.m ET. Call 1-800-225-5132 to speak directly with a representative who will be able to assist you with your accounts. In Person--Visit one of our investor center locations to meet with a representative who will be able to assist you with your accounts. While there, you can drop off applications or obtain prospectuses and other literature. Automated 24-Hour Services Tele*Access(R)(1-800-638-2587) provides information such as account balance, date and amount of your last transaction, latest dividend payment, and fund prices and yields. Additionally, you have the ability to request prospectuses, statements, account and tax forms; reorder checks; and initiate purchase, redemption, and exchange orders for identically registered accounts. PC*Access(R) provides the same information as Tele*Access, but on a personal computer via dial-up modem. Account Services Checking--Write checks for $500 or more on any money market and most bond fund accounts (except the High Yield Fund and Emerging Markets Bond Fund). Automatic Investing--Build your account over time by investing directly from your bank account or paycheck with Automatic Asset Builder. Additionally, Automatic Exchange enables you to set up systematic investments from one fund account into another, such as from a money fund into stock fund. A low, $50 minimum makes it easy to get started. Automatic Withdrawal--If you need money from your fund account on a regular basis, you can establish scheduled automatic redemptions. Dividend and Capital Gains Payment Options--Reinvest all or some of your distributions, or take them in cash. We give you maximum flexibility and convenience. Investment Information Combined Statement--A comprehensive overview of your T. Rowe Price accounts. The summary page gives your earnings by tax category, provides total portfolio value, and lists your investments by type--stock, bond, and money market. Detail pages itemize account transactions by fund. Quarterly Shareholder Reports--Portfolio managers review the performance of the funds in plain language and discuss T. Rowe Price's economic outlook. The T. Rowe Price Report--A quarterly newsletter with relevant articles on market trends, personal financial planning, and T. Rowe Price's economic perspective. Insights--A library of information that includes reports on mutual fund tax issues, investment strategies, and financial markets. Detailed Investment Guides--Our widely acclaimed Asset Mix Worksheet, College Planning Kit, Retirees Financial Guide, Retirement Planning Kit (also available on disk for PC use), and Guide to Risk-Adjusted performance can help you determine and reach your investment goals. Discount Brokerage You can trade stocks, bonds, options, precious metals, and other securities at a substantial savings over regular commission rates. Call a shareholder service representative for more information. 11 -------------------------------------------------------------------------------- SEMIANNUAL REPORT -------------------------------------------------------------------------------- T. Rowe Price ------------- NEW AMERICA GROWTH FUND JUNE 30, 1995 [LOGO OF T. ROWE PRICE APPEARS HERE] FOR YIELD, PRICE, LAST TRANSACTION, AND CURRENT BALANCE, 24 HOURS, 7 DAYS A WEEK, CALL: 1-800-638-2587 toll free 625-7676 Baltimore area FOR ASSISTANCE WITH YOUR EXISTING FUND ACCOUNT, CALL: Shareholder Service Center 1-800-225-5132 toll free 625-6500 Baltimore area T. ROWE PRICE 100 East Pratt Street Baltimore, Maryland 21202 This report is authorized for distribution only to shareholders and to others who have received a copy of the prospectus of the T. Rowe Price New America Growth Fund./(R)/ T. Rowe Price Invest With Confidence/(R)/ NAG