-----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, RISxu4ABfp4QUkZhaLakxGQS35A7/YINbi31g3MNlcSycjAkzCOcFz96RuRV9naG dTZ2T6snK6+0LTcHvoyn/g== 0000950109-96-000496.txt : 19960202 0000950109-96-000496.hdr.sgml : 19960202 ACCESSION NUMBER: 0000950109-96-000496 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960201 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: 96509914 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 ANNUAL REPORT - -------------------------------------------------------------------------------- Fellow Shareholders - -------------------------------------------------------------------------------- Nineteen ninety-five was another record-breaking year for the stock market. The Dow Jones Industrial Average broke through 4000 then 5000 on the way to its best year since 1975. The Standard & Poor's 500 Stock Index recorded similarly strong gains. The market climbed steadily with less of a correction along the way than in any year on record. Sharply falling interest rates, a strong bond market, and a healthy economy were the primary stimulants to the strong stock market performance. Your fund performed well in both absolute and relative terms. Its 6-and 12- month returns of 20.6% and 44.3%, respectively, outstripped by a wide margin the unmanaged S&P 500 as well as the average growth mutual fund for both periods. New America Growth Fund celebrated its tenth birthday in September, and we are pleased to report that its 393.4% cumulative return since inception also outperformed the S&P 500 (367.9%) and the Lipper Growth Fund Average (301.9%).
- -------------------------------------------------------------------------------- Performance Comparison - -------------------------------------------------------------------------------- Periods Ended 12/31/95 6 Months 12 Months -------- --------- New America Growth Fund 20.6% 44.3% S&P 500 14.5 37.6 Lipper Growth Fund Average 11.1 30.8 - --------------------------------------------------------------------------------
YEAR-END DISTRIBUTIONS On December 26, the fund's Board of Trustees declared a short-term capital gain distribution of $0.26 per share and a long-term distribution of $1.49, payable to shareholders of record on that date. Your check or statement confirming this distribution was mailed in early January, and Form 1099-DIV, which you will need for your 1995 taxes, was sent toward month-end. MARKET ENVIRONMENT The major driver behind the 1995 market surge was the sharp decline in long-term interest rates from nearly 8% at year-end 1994 to under 6% by year-end 1995. Falling rates have underpinned this long bull market, which began in 1982. (When rates backtracked in 1994, the rally stalled.) The Federal Reserve reversed course in July 1995, cutting short-term rates for the first time in three years, as the economy appeared to have achieved a "soft landing" of slower but more sustainable growth. A related positive for the stock market was the lack of major inflationary pressures, and this together with falling rates enabled price/earnings ratios to expand. Corporate profit growth also continued to exceed expectations, while slowing from 1994's torrid pace. Strong profits and rising margins are a tribute to the increased competitiveness of U.S. companies in the global arena. Managements of most major U.S. corporations have undertaken massive cost-cutting programs, including layoffs and restructurings, to become more competitive and boost their stock prices. Another major contributor to last year's strong financial markets was Wall Street's perception of a changed political attitude in Washington. After winning control of Congress in the November 1994 elections, the Republicans pushed for sweeping changes to reduce the government's involvement in the economy and increase reliance on private market forces. This was viewed very favorably by stock and bond market investors. Not surprisingly, the reappearance of gridlock and infighting toward year-end, which cast doubt on deficit reduction and the proposed capital gains tax cut, stalled the market's advance, at least temporarily. The Fed's success in slowing growth led investors to seek companies that seemed likely to prosper regardless of the cyclical environment. Cyclical stocks, particularly consumer-related, lagged, while growth stocks did well. The current environment has been favorable for your fund, with its emphasis on high- growth companies operating primarily in noncyclical, service sector industries. This focus helped the fund outperform in 1995. PORTFOLIO REVIEW While technology stocks' impressive gains for much of the year grabbed the headlines, most growth stocks did well. Your fund generally shuns the more cyclical and volatile technology sector, but several large portfolio holdings benefited from the market's love affair with the Internet. AMERICA ONLINE, the fastest growing company in the burgeoning on-line services field, almost doubled in price after we bought it late in the second quarter. Top holding CUC INTERNATIONAL, which has a small but rapidly growing division offering on-line shopping and other services, was also touched by Internet euphoria and rose over 50% for the year. The market's search for companies with strong, consistent earnings growth intensified as the year went on and helped focus attention on many of our largest holdings. The top contributor to performance for the last six months and the full year was HFS, a leading franchiser of hotel brands including Howard Johnson, Ramada, and Days Inn. During 1995, the company entered the residential housing field by acquiring major franchiser, Century 21. HFS stock tripled in price during the year. Several leading HMOs, which came under pressure in the first half, contributed strongly to performance in the second half, namely UNITED HEALTHCARE and new holding PACIFICARE HEALTH SYSTEMS. Half of the fund's worst performers were in the consumer sector, where retailing and restaurant companies generally lagged, particularly late in the year as consumers pulled in their horns. Nevertheless, this sector produced some winners. Vitamin and health product retailer GENERAL NUTRITION rose more than 50% for the year, while men's sportswear designer TOMMY HILFIGER doubled following our initial purchase in March. After sharply paring our consumer holdings and boosting business services stocks in 1994, we made relatively small sector shifts in 1995, as shown in the table. Within the consumer sector, however, we continued to reduce our retailing and restaurant commitments while adding significantly to the media/communication field with new holdings such as CAPITAL CITIES/ABC, soon to close a merger with WALT DISNEY; cable TV companies COMCAST and COX COMMUNICATIONS; and leading paging company PAGING NETWORK. We also continued to build our business services holdings, adding large positions in ADT and OLSTEN.
- -------------------------------------------------------------------------------- Sector Diversification - -------------------------------------------------------------------------------- 12/31/94 12/31/95 -------- -------- Financial Services 12% 10% Consumer Services 41 42 Business Services 43 46 Reserves 4 2 -------- -------- Total 100% 100% - --------------------------------------------------------------------------------
We continued to seek companies with exceptional growth prospects in all economic climates, and the portfolio's growth characteristics remained strong. Most portfolio companies plow their earnings back into their businesses rather than pay high dividends, so that they can maintain or increase their earnings momentum. In fact, many pay no dividends at all in order to help deliver sustainable earnings growth of 20% to 25% per year.
- -------------------------------------------------------------------------------- Portfolio Characteristics - -------------------------------------------------------------------------------- New America Growth Fund S&P 500 ----------- ------- Earnings Growth Rate Estimated Next 5 Years 20.8% 7.0% Profitability-Return on Equity Latest 12 Months 16.1 16.5 Dividend Yield on Stocks 0.4 2.3 P/E Ratio (Based on Next 12 Months' Estimated Earnings) 19.7X 15.8X - --------------------------------------------------------------------------------
2 OUTLOOK Our outlook for the equity markets in 1996 remains positive. Most of the forces that underpinned the market's advance last year are still in place, albeit somewhat less pronounced. The economy continues to grow, inflation and interest rates remain low, and demand for U.S. equities is robust. On the negative side, corporate earnings growth is slowing and more companies are reporting earnings shortfalls. In Washington, the President and the Congress appear stalemated in their negotiations over the budget. Stock and bond markets are both undergoing corrections as we write, which should not be surprising given 1995's stellar advances. We continue to believe that the fund is well positioned for the economic environment we anticipate in 1996. Our portfolio companies should show strong earnings gains even as the overall rate of corporate profit growth slows. While your fund will always focus on service-related holdings, we may take advantage of the flexibility provided by our charter to gradually expand our exposure to promising nonservice businesses that meet our growth criteria. (The prospectus allows up to 25% of assets to be invested in such companies.) Any significant purchases outside the service sector will of course be discussed in our reports to you. While valuation levels have risen for many growth companies, we are comfortable with the portfolio's valuation level and optimistic that the fund will continue to generate 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 January 18, 1996 - -------------------------------------------------------------------------------- A Word on Market Corrections - -------------------------------------------------------------------------------- After the stock market's spectacular run in 1995, concerns about a "correction" have intensified. Most market observers consider a correction to be a short and sometimes steep decline following a period of rising prices. Moderate corrections of around 10% have been quite common, occurring on average about once every two years over the last half-century, according to Ned Davis Research. The market as measured by the Dow Jones Industrial Average has not experienced a moderate correction since early 1994. Furthermore, the Dow last hit a bear market bottom -- defined as a drop of at least 20% -- in October 1990. Therefore, it would not be surprising to see a modest pullback in 1996, on the order of 5% to 10%. In fact, as we write, the market has gotten off to a rocky start. Corrections are not only common, but can be beneficial for long-term investors, especially those who invest in regular amounts through dollar cost averaging. In a correction, overall stock prices decline, often leading to more attractive valuations and good buying opportunities. History has shown that investors who continue to buy through a downturn fare quite well. In fact, the Dow has proven resilient in the aftermath of past corrections of around 10%, taking an average of just six months to recover its losses, according to Ned Davis. (To realize the benefits of dollar cost averaging, you should be prepared to continuously purchase securities over a period of time, in up and down markets. This approach does not assure a gain nor protect you from a loss in declining markets.) We raise the issue of a market correction not as a prediction, but as a reminder that stock prices do not move in only one direction. If you are satisfied that your investments are appropriate for your various objectives, we recommend that you stay the course when a correction eventually occurs. - -------------------------------------------------------------------------------- 3 - -------------------------------------------------------------------------------- Contributions to the Change in Net Asset Value Per Share - -------------------------------------------------------------------------------- T. Rowe Price New America Growth Fund
Six Months Ended December 31, 1995 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TEN BEST CONTRIBUTORS - -------------------------------------------------------------------------------- HFS 68c United HealthCare 43 CUC International 29 PacifiCare Health Systems 28 Paging Network 27 America Online 23 Paychex 23 Money Store 22 General Nutrition 22 Tommy Hilfiger 19 - -------------------------------------------------------------------------------- Total 304c
- -------------------------------------------------------------------------------- TEN WORST CONTRIBUTORS - -------------------------------------------------------------------------------- Office Depot - 23c Loewen Group** 10 Browning-Ferris** 8 Dollar General** 8 Mobile Telecommunication Technologies 7 Circuit City Stores 6 PriceCostco 5 Vodafone 5 Sbarro 2 Micro Warehouse 2 - -------------------------------------------------------------------------------- Total - 76c ================================================================================
* Position added ** Position eliminated
Twelve Months Ended December 31, 1995 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TEN BEST CONTRIBUTORS - -------------------------------------------------------------------------------- HFS* 80c CUC International 58 First Data 45 Paychex 41 United HealthCare 36 Money Store 35 General Nutrition 34 MGIC Investment 31 Paging Network* 31 Tommy Hilfiger* 29 - -------------------------------------------------------------------------------- Total 420c
- -------------------------------------------------------------------------------- TEN WORST CONTRIBUTORS - -------------------------------------------------------------------------------- Office Depot - 13c AnnTaylor Stores** 10 Sbarro 8 Autotote 6 Toys "R" Us** 6 Browning-Ferris** 5 PriceCostco 5 Foundation Health** 3 Pittston Services** 2 Brinker 2 - -------------------------------------------------------------------------------- Total - 60c ================================================================================
4 - -------------------------------------------------------------------------------- Twenty-Five Largest Holdings - -------------------------------------------------------------------------------- December 31, 1995
Percent of Company Net Assets - ----------------------------------------------------------------- ---------- CUC International 3.9% United HealthCare 3.0 HFS 3.0 ADT 2.6 Paging Network 2.4 Comcast 2.3 Viacom 2.3 General Nutrition 2.3 Capital Cities/ABC 2.1 First Data 2.1 Vodafone 2.1 Franklin Resources 2.0 Alco Standard 2.0 Cardinal Health 2.0 MGIC Investment 2.0 Olsten 1.9 Percent of Company Net Assets - ----------------------------------------------------------------- ---------- Catalina Marketing 1.8% SunGard Data Systems 1.8 Revco 1.8 ADVO 1.8 PacifiCare Health Systems 1.8 Office Depot 1.7 Columbia/HCA Healthcare 1.7 Paychex 1.7 Quorum Health Group 1.6 - -------------------------------------------------------------------------------- Total 53.7% ================================================================================
- -------------------------------------------------------------------------------- Average Annual Compound Total Return - -------------------------------------------------------------------------------- Periods Ended December 31, 1995 1 Year 5 Years 10 Years ------ ------- -------- 44.31% 22.80% 16.85% - --------------------------------------------------------------------------------
Investment return and principal value represent past performance and will vary. Shares may be worth more or less at redemption than at original purchase. - -------------------------------------------------------------------------------- Performance Comparison - -------------------------------------------------------------------------------- [GRAPH APPEARS HERE] Note: The index return does not reflect expenses, which have been deducted from the fund's return. 5 - -------------------------------------------------------------------------------- Investment Record T. Rowe Price New America Growth Fund - -------------------------------------------------------------------------------- The table below shows the investment record of one share of the T. Rowe Price New America Growth Fund, purchased at the initial price of $10.00, for the period 9/30/85 through 12/31/95. Over this time, stock prices in general have risen. The results shown should not be considered as a representation of the income or capital gain or loss which may be realized from an investment made in the Fund today. Per Share Data
With Capital Gains and Income Dividends Taken in Cash Reinvested in Additional Shares Annual Total Return ------------------------------------- -------------------------------------- on Investment Year Net Capital Capital % Change Ended Asset Gain Income Gain Income Value of ------------------- 12/31 Value Distributions/1/ Dividends Distributions Dividends Investment Fund S&P 500 - ------- ------ ---------------- --------- ------------- --------- ---------- ------ ------- 1985/2/ $11.85 -- -- -- -- $11.85 18.5% 17.2% 1986 13.14 $0.30 $0.10 $0.30 $0.10 13.55 14.4 18.7 1987 10.45 1.39 0.06 1.46 0.06 12.28 -9.4 5.3 1988 12.38 -- -- -- -- 14.55 18.5 16.5 1989 16.90 0.23 -- 0.27 -- 20.14 38.4 31.6 1990 14.66 -- 0.17 -- 0.20 17.67 -12.2 -3.1 1991 22.79 0.87 -- 1.05 -- 28.62 61.9 30.3 1992 24.86 0.18 -- 0.23 -- 31.45 9.9 7.6 1993 28.04 1.13 -- 1.43 -- 36.93 17.4 10.1 1994 25.42 0.53 -- 0.70 -- 34.19 -7.4 1.3 1995 34.91 1.75 -- 2.35 -- 49.34 44.3 37.6 - ----------------------------------------------------------------------------------------------------------------- Total $6.38 $0.33 $7.79 $0.36 =================================================================================================================
/1/ Includes short-term capital gains of $0.24 in 1987; $0.24 in 1993; $0.08 in 1994; and $0.26 in 1995. /2/ From inception 9/30/85 to 12/31/85. 6 - -------------------------------------------------------------------------------- Statement of Net Assets T. Rowe Price New America Growth Fund / December 31, 1995 - -------------------------------------------------------------------------------- (values in thousands)
Value ---------- - ---------------------------------------------------------------------------------------------- Common Stocks -- 98.0% - ---------------------------------------------------------------------------------------------- FINANCIAL SERVICES -- 10.4% INSURANCE -- 4.1% 275,000 shs ACE Limited................................................. $ 10,931 375,000 MGIC Investment............................................. 20,344 200,000 UNUM........................................................ 11,000 42,275 INVESTMENT SERVICES -- 2.0% 413,100 Franklin Resources.......................................... 20,810 OTHER FINANCIAL SERVICES -- 4.3% 100,000 Fannie Mae.................................................. 12,412 150,000 Freddie Mac................................................. 12,525 100,000 Household International..................................... 5,913 499,999 Mercury Finance............................................. 6,625 437,500 Money Store................................................. 6,836 44,311 TOTAL FINANCIAL SERVICES 107,396 - ---------------------------------------------------------------------------------------------- CONSUMER SERVICES -- 41.7% - ---------------------------------------------------------------------------------------------- RETAILING/GENERAL MERCHANDISERS -- 1.2% 800,000 * PriceCostco................................................. 12,300 RETAILING/SPECIALTY MERCHANDISERS -- 14.1% 420,000 * AutoZone.................................................... 12,128 500,000 Circuit City Stores......................................... 13,812 725,000 *+ Cole National (Class A)..................................... 10,059 225,000 * Eckerd...................................................... 10,041 1,000,000 * General Nutrition........................................... 23,250 250,000 Home Depot.................................................. 11,969 250,000 * Kohl's...................................................... 13,125 900,000 * Office Depot................................................ 17,775 650,000 * Revco....................................................... 18,362 350,000 * Tommy Hilfiger.............................................. 14,831 145,352 ENTERTAINMENT AND LEISURE -- 2.8% 150,000 * Mirage Resorts.............................................. 5,175 100,000 * Viacom (Class A)............................................ 4,588 400,000 * Viacom (Class B)............................................ 18,950 28,713 MEDIA/COMMUNICATION SERVICES -- 16.4% 350,000 * AirTouch Communications..................................... 9,887 300,000 * America Online.............................................. 11,194 Value ---------- 175,000 shs Capital Cities/ABC.......................................... $ 21,591 200,000 * CellStar.................................................... 5,225 906,300 Comcast (Class A Special)................................... 16,483 413,700 Comcast (Class A)........................................... 7,291 700,000 * Cox Communications (Class A)................................................ 13,650 400,000 Frontier.................................................... 12,000 350,000 Gaylord Entertainment....................................... 9,713 325,000 * Mobile Telecommunication Technologies............................................. 6,947 1,020,000 * Paging Network.............................................. 24,544 400,000 * PanAmSat.................................................... 8,850 600,000 Vodafone ADR................................................ 21,150 168,525 RESTAURANTS/FOOD DISTRIBUTION -- 2.2% 250,000 * Brinker..................................................... 3,781 158,500 * Lone Star Steakhouse & Saloon................................................. 6,073 300,000 * Outback Steakhouse.......................................... 10,781 102,500 Sbarro...................................................... 2,204 22,839 PERSONAL SERVICES -- 5.0% 1,187,296 * CUC International........................................... 40,516 250,000 Service Corp................................................ 11,000 51,516 TOTAL CONSUMER SERVICES 429,245 - ---------------------------------------------------------------------------------------------- BUSINESS SERVICES -- 45.6% - ---------------------------------------------------------------------------------------------- HEALTH CARE SERVICES -- 8.9% 350,000 Columbia/HCA Healthcare..................................... 17,763 250,086 * HealthSouth................................................. 7,284 207,100 * PacifiCare Health Systems (Class B)................................................ 18,069 772,000 * Quorum Health Group......................................... 16,888 475,000 United HealthCare........................................... 31,112 91,116 DISTRIBUTION SERVICES -- 5.9% 250,000 * Airgas...................................................... 8,313 450,000 Alco Standard............................................... 20,531 375,000 Cardinal Health............................................. 20,531 410,000 * Patterson Dental............................................ 11,121 60,496 COMPUTER SERVICES -- 6.8% 400,000 * BISYS Group................................................. 12,200 300,000 * Ceridian.................................................... 12,375 38,300 * DST Systems................................................. 1,092
7 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Value ---------- 317,180 shs First Data.................................................. $ 21,211 154,500 * FIserv...................................................... 4,625 660,000 * SunGard Data Systems........................................ 18,563 70,066 ENVIRONMENTAL SERVICES -- 2.6% 458,900 * Sanifill.................................................... 15,316 600,000 * USA Waste Services.......................................... 11,325 26,641 ENERGY SERVICES -- 4.3% 325,000 * BJ Services................................................. 9,425 350,000 Camco International......................................... 9,800 225,000 Schlumberger................................................ 15,581 400,000 * Smith International......................................... 9,400 44,206 OTHER BUSINESS SERVICES -- 17.1% 1,750,000 * ADT......................................................... 26,250 700,000 ADVO........................................................ 18,200 300,000 * Catalina Marketing.......................................... 18,825 394,000 * Corporate Express........................................... 11,820 200,000 * DIMAC....................................................... 5,450 400,000 * Global DirectMail........................................... 11,000 375,000 * HFS......................................................... 30,656 213,000 * Micro Warehouse............................................. 9,266 500,000 Olsten...................................................... 19,750 356,250 Paychex..................................................... 17,701 150,000 * Viking Office Products...................................... 6,984 175,902 TOTAL BUSINESS SERVICES 468,427 MISCELLANEOUS COMMON STOCKS -- 0.3% 2,638 TOTAL COMMON STOCKS (COST $652,848) 1,007,706 - ---------------------------------------------------------------------------------------------- Short-Term Investments -- 2.0% - ---------------------------------------------------------------------------------------------- CERTIFICATES OF DEPOSIT -- 0.3% $3,000,000 Wachovia Bank Georgia, 5.75%, 1/31/96........................................... 3,000 COMMERCIAL PAPER -- 1.7% 5,000,000 ANZ (Delaware), 5.668%, 2/9/96................................................... 4,929 5,000,000 Caisse des Depots et Consignations, 4(2), 5.77%, 1/18/96..................................... 4,958 Value ---------- $5,000,000 Cheltenham & Glouster, 5.58%, 2/8/96............................................ $ 4,962 1,000,000 International Nederland Bank, 5.47%, 3/22/96..................................... 986 1,187,872 Investments in Commercial Paper through a joint account, 5.90-6.05%, 1/2/96................................................... 1,187 17,022 TOTAL SHORT-TERM INVESTMENTS (COST $20,022) 20,022 - ---------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES -- 100.0% OF NET ASSETS (COST $672,870) 1,027,728 - ---------------------------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES.................................................. 482 ---------- NET ASSETS CONSIST OF: Value -------- Accumulated net realized gain/loss - net of distributions........................... $ 5,851 Net unrealized gain (loss).......................... 354,858 Paid-in-capital applicable to 29,456,295 shares of no par value capital stock outstanding; unlimited number of shares authorized................................ 667,501 -------- NET ASSETS..................................................................... $1,028,210 ========== NET ASSET VALUE PER SHARE...................................................... $34.91 ====== - ----------------------------------------------------------------------------------------------
+ Affiliated company * Non-income producing 4(2) Commercial paper sold within terms of a private placement memorandum, exempt from registration under section 4.2 of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." The accompanying notes are an integral part of these financial statements. 8 - -------------------------------------------------------------------------------- Statement of Operations - -------------------------------------------------------------------------------- T. Rowe Price New America Growth Fund / Year Ended December 31, 1995 (in thousands) INVESTMENT INCOME Income Dividend......................................................... $ 3,126 Interest......................................................... 1,824 -------- Total income..................................................... 4,950 -------- Expenses Investment management............................................ 5,554 Shareholder servicing............................................ 2,566 Custody and accounting........................................... 155 Prospectus and shareholder reports............................... 151 Registration..................................................... 104 Legal and audit.................................................. 32 Directors........................................................ 21 Miscellaneous.................................................... 38 -------- Total expenses................................................... 8,621 -------- Net investment income............................................... (3,671) -------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on securities.............................. 58,011 Change in net unrealized gain or loss on securities................. 236,779 -------- Net realized and unrealized gain (loss)............................. 294,790 -------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS................... $291,119 ======== - -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. 9 - -------------------------------------------------------------------------------- Statement of Changes in Net Assets - -------------------------------------------------------------------------------- T. Rowe Price New America Growth Fund (in thousands)
Year Ended December 31, 1995 1994 ---------- --------- INCREASE (DECREASE) IN NET ASSETS FROM Operations Net investment income..................................................... $ (3,671) $ (1,681) Net realized gain (loss).................................................. 58,011 13,346 Change in net unrealized gain or loss..................................... 236,779 (61,025) ---------- --------- Increase (decrease) in net assets from operations......................... 291,119 (49,360) ---------- --------- Distributions to shareholders Net realized gain......................................................... (49,223) (13,216) ---------- --------- Capital share transactions* Shares sold............................................................... 267,361 232,076 Distributions reinvested.................................................. 48,036 12,762 Shares redeemed........................................................... (175,229) (155,234) ---------- --------- Increase (decrease) in net assets from capital share transactions......... 140,168 89,604 ---------- --------- Increase (decrease) in net assets............................................ 382,064 27,028 NET ASSETS Beginning of period.......................................................... 646,146 619,118 ---------- --------- End of period................................................................ $1,028,210 $ 646,146 ========== ========= - ---------------------------------------------------------------------------------------------------------- * Share information Shares sold............................................................... 8,445 8,663 Distributions reinvested.................................................. 1,396 508 Shares redeemed........................................................... (5,804) (5,834) ---------- --------- Increase (decrease) in capital shares outstanding......................... 4,037 3,337 ========== =========
The accompanying notes are an integral part of these financial statements. 10 - -------------------------------------------------------------------------------- Notes to Financial Statements - -------------------------------------------------------------------------------- T. Rowe Price New America Growth Fund / December 31, 1995 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) Affiliated Companies - Investments in companies 5% or more of whose outstanding voting securities are held by the fund are defined as "Affiliated Companies" in Section 2(a)(3) of the Investment Company Act of 1940. C) Other - Income and expenses are recorded on the accrual basis. Investment transactions are accounted for on the trade date. Realized gains and losses are reported on the identified cost basis. Dividend income and distributions to shareholders are recorded by the fund on the ex-dividend date. Income and capital gain distributions are determined in accordance with federal income tax regulations and may differ from those determined in accordance with generally accepted accounting principles. NOTE 2 - INVESTMENT TRANSACTIONS A) Commercial Paper Joint Account - The fund, and other affiliated funds, may transfer uninvested cash into a commercial paper joint account, the daily aggregate balance of which is invested in high-grade commercial paper. All securities purchased by the joint account satisfy the fund's criteria as to quality, yield, and liquidity. B) Other - Purchases and sales of portfolio securities, other than short-term, aggregated $529,535,000 and $437,241,000, respectively, for the year ended December 31, 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. In order for the fund's capital accounts and distributions to shareholders to reflect the tax character of certain transactions, $3,671,000 of undistributed net investment income was reclassified as a decrease to undistributed net realized gains during the year ended December 31, 1995. The results of operations and net assets were not affected by the reclassifications. At December 31, 1995, the aggregate cost of investments for federal income tax and financial reporting purposes was $672,870,000 and net unrealized gain aggregated $354,858,000, of which $357,368,000 related to appreciated investments and $2,510,000 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 $586,000 was payable at December 31, 1995. The fee is computed daily and paid monthly, 11 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 December 31, 1995, and for the year 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 $2,289,000 for the year ended December 31, 1995, of which $241,000 was payable at period end. 12 - -------------------------------------------------------------------------------- Financial Highlights - -------------------------------------------------------------------------------- T. Rowe Price New America Growth Fund
For a share outstanding throughout each period -------------------------------------------------------------- Year Ended December 31, 1995 1994 1993 1992 1991 -------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD.............. $25.42 $28.04 $24.86 $22.79 $14.66 ------ ------ ------ ------ ------ Investment activities Net investment income.......................... (0.12) (0.07) (0.08) (0.04) (0.02) Net realized and unrealized gain (loss)........ 11.36 (2.02) 4.39 2.29 9.02 ------ ------ ------ ------ ------ Total from investment activities............... 11.24 (2.09) 4.31 2.25 9.00 ------ ------ ------ ------ ------ Distributions Net realized gain.............................. (1.75) (0.53) (1.13) (0.18) (0.87) ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD.................... $34.91 $25.42 $28.04 $24.86 $22.79 ====== ====== ====== ====== ====== - ----------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Total return...................................... 44.3% (7.4)% 17.4% 9.9% 61.9% Ratio of expenses to average net assets........... 1.07% 1.14% 1.23% 1.25% 1.25% Ratio of net investment income to average net assets............................. (0.46)% (0.27)% (0.39)% (0.44)% (0.12)% Portfolio turnover rate........................... 56.2% 31.0% 43.7% 26.4% 42.3% Net assets, end of period (in thousands).......... $1,028,210 $646,146 $619,118 $480,229 $231,729 - -----------------------------------------------------------------------------------------------------------------------
13 - -------------------------------------------------------------------------------- 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, 1995, 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 generally accepted accounting principles. 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 generally accepted auditing standards 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, 1995 by correspondence with custodians and brokers, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Baltimore, Maryland January 18, 1996 14 - -------------------------------------------------------------------------------- Shareholder Services - -------------------------------------------------------------------------------- To help shareholders 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 8:30 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 a 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. 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. Performance Update--A quarterly report reviewing recent market developments and providing comprehensive performance information for every T. Rowe Price fund. 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. 15 - -------------------------------------------------------------------------------- ANNUAL REPORT - -------------------------------------------------------------------------------- T. Rowe Price - ------------- NEW AMERICA GROWTH FUND DECEMBER 31, 1995 [LOGO 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)/. Invest With Confidence/(R)/ [LOGO APPEARS HERE] T. Rowe Price NAG -----END PRIVACY-ENHANCED MESSAGE-----