-----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, OoTcMX3fRpsUTthHW2nYtflxoFHp0J3wY8EhvN3edLh9SJTC3RVV2QIcy3NL3DDA wyQrrqbJuk0RXsLiHt2WaA== 0000950109-96-005130.txt : 19960813 0000950109-96-005130.hdr.sgml : 19960813 ACCESSION NUMBER: 0000950109-96-005130 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960812 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: 96608682 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 SEMI ANNUAL REPORT Semiannual Report New America Growth Fund June 30, 1996 T. Rowe Price REPORT HIGHLIGHTS - --------------------------------------- . Overcoming a rapid rise in interest rates, stocks extended their most recent surge that began in December 1994. . The environment favored your fund, as the economy's apparently modest growth encouraged investors to seek noncyclical stocks with earnings momentum. . The fund's 14.52% and 38.11% returns for the first half and past 12 months, respectively, exceeded the S&P 500 Stock Index and the Lipper Growth Funds Average for both periods. . The business services sector was the major contributor to performance. We reduced exposure to consumer services and increased holdings of financial services companies. . While we would not be surprised by a correction, we are optimistic that our service-oriented, growth companies will do well in the moderate growth environment we expect. Fellow Shareholders Despite a substantial rise in interest rates, the stock market extended the remarkable surge that began in December 1994. In a period when the economy was perceived to be growing slowly, investors returned to growth stocks, and your fund performed well.
PERFORMANCE COMPARISON - ----------------------------------------------- Periods Ended 6/30/96 6 Months 12 Months - ----------------------------------------------- New America Growth Fund 14.52% 38.11% ............................................... S&P 500 10.10 26.00 ............................................... Lipper Growth Funds Average 10.08 22.20 ...............................................
For both the 6- and 12-month periods ended June 30, the fund exceeded the unmanaged Standard & Poor's 500 Stock Index and an average of growth stock funds by a considerable margin. Market Environment The long bull market continued in the first half even though one of its main supports over the past 14 years, falling interest rates, evaporated. A major decline in long-term interest rates from over 14% in January 1982 to under 6% by the end of 1995 had helped propel the stock market to all-time highs. However, long-term rates rose over one percentage point to just above 7% in the first half of 1996, reflecting perceptions of a strengthening economy and fears of an increase in the rate of inflation. The stock market diverged from the bond market, and, driven by huge cash inflows into U.S. equity mutual funds, stocks continued their ascent. The market's continued advance to record highs with returns well above its long- term average of 10% to 11% per year contributed to a surge in speculative activity. Record mutual fund inflows, feverish merger and acquisition activity, and an unprecedented number of initial and secondary stock offerings were all signs that the market was becoming overheated and that a correction might be imminent. Given the economy's apparently modest growth rate, many investors sought companies that seemed likely to prosper regardless of the economic environment. Therefore, growth stocks did well while cyclical stocks and those sensitive to rising interest rates lagged. Energy service stocks were also strong performers, benefiting from higher natural gas prices and rising demand. 1 PORTFOLIO REVIEW The recent environment was favorable for your fund, with its emphasis on high- growth companies operating primarily in noncyclical, service industries. In the first half, the top contributors to the fund were almost all in the business services category: HFS, a hotel and real estate agency franchiser that recently entered the rental car business and continued to exceed earnings estimates by a considerable margin; Republic Industries, a fast-growing company involved in electronic security systems, used car retailing, and waste disposal, which announced several major acquisitions during the quarter; and two waste management companies that plan to merge, USA Waste Services and Sanifill. The worst detractors to performance were concentrated in two industries, health maintenance organizations (HMOs) and retailing. HMOs United HealthCare and PacifiCare Health Systems were hurt by investor perceptions of rising medical- cost inflation and by an excessively competitive pricing environment. Micro Warehouse, a catalog retailer of computer hardware and software, and General Nutrition, the nation's leading retailer of vitamins and nutritional supplements, each suffered from declining sales increases and earnings shortfalls. The stock of a third retailer, Revco, a drug store operator, performed poorly in the period as a proposed merger was blocked by the Federal Trade Commission. The portfolio remains well diversified in the services sector within the following broad categories:
SECTOR DIVERSIFICATION - ---------------------------------------------- 12/31/95 6/30/96 - ---------------------------------------------- FinancialServices 10% 15% .............................................. Consumer Services 42 33 .............................................. Business Services 46 49 .............................................. Reserves 2 3 .............................................. Total 100% 100%
Overall, the business services sector contributed almost two-thirds of the portfolio's performance in the first half, and the portfolio's weighting in this sector rose slightly as a result. We also added new holdings in this sector including Republic Industries, discussed above, and Apria Healthcare, a rapidly growing provider of home health services. The consumer services weighting dropped significantly. We trimmed some of our retail holdings in the first half as we saw less long-term 2 opportunity in the sector than 5 or 10 years ago. The megatrend in retailing, which created many fortunes in the 1980s and early 1990s, was the development of discount superstore chains in numerous categories. Today, there are few niches left to exploit. Also within the consumer category, we sold several communications companies that either had disappointed relative to our expectations or were experiencing slowing growth rates. Some of the proceeds from sales in the consumer sector were redeployed into financial services, where we added positions in PMI Group, a major player in the growing mortgage insurance industry, Norwest, a well-managed bank with significant consumer finance operations, and Green Tree Financial, a fast- growing consumer finance company specializing in manufactured housing loans.
PORTFOLIO CHARACTERISTICS - ------------------------------------------------ New America As of 6/30/96 Growth Fund S&P 500 - ------------------------------------------------ Earnings Growth Rate Estimated Next 5 Years* 18.8% 11.7% ................................................ Profitability - Return on Equity Latest 12 Months 17.3 19.6 ................................................ Divident Yield on Stocks 0.4 2.2 ................................................ P/E Ratio (Based on Next 12 Months' Estimated Earnings) 21.2X 15.9X ................................................
* Earnings forecasts are based on T. Rowe Price research and are in no way indicative of future investment returns. We continue to seek companies with exceptional growth prospects in all economic climates, and the portfolio's growth characteristics remain strong. Most of our companies reinvest their earnings back in their businesses rather than pay high dividends so that they can maintain or even increase their earnings growth. In fact, many pay no dividends at all in order to sustain steady earnings increases of 20% or more annually. OUTLOOK For a year and a half, investors enjoyed virtually ideal conditions: enough economic growth to drive increasing corporate profits, but not so much that the Federal Reserve had to tighten monetary policy. We see challenges looming. Interest rates have risen significantly without disturbing a somewhat speculative stock market, and we wonder how long this can persist. The political pendulum seems to be reversing: hostility toward business and investors has been manifested lately in several Federal Trade Commission rulings, the Clinton Administration's 3 resolute opposition to capital gains tax reduction, and the passage of legislation increasing the minimum wage. There is also nascent evidence that the widespread corporate cost-cutting efforts of recent years, which have driven corporate profits (and, to some extent, the stock market), are winding down or possibly reversing. One final, critical issue to monitor is inflation: while we do not expect a resurgence, there are disquieting signs in the labor and commodities markets, and we have probably seen the lows in inflation for this cycle. We would not be surprised to encounter a stock market correction, but we remain optimistic about the long-term prospects for the portfolio's companies. Their relatively noncyclical, service-oriented businesses should fare comparatively well in the moderate economic growth environment we anticipate. 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 18, 1996 4 T. Rowe Price New America Growth Fund - ---------------------------------------------------------------------
Portfolio Highlights - --------------------------------------------------------------------- TWENTY-FIVE LARGEST HOLDINGS Percent of Net Assets 6/30/96 - --------------------------------------------------------------------- HFS 3.9% ..................................................................... United HealthCare 2.9 ..................................................................... ADT 2.8 ..................................................................... Franklin Resources 2.0 ..................................................................... Catalina Marketing 2.0 - --------------------------------------------------------------------- Cardinal Health 2.0 ..................................................................... ACE Limited 2.0 ..................................................................... CUC International 2.0 ..................................................................... SunGard Data Systems 2.0 ..................................................................... Paging Network 1.9 - --------------------------------------------------------------------- First Data 1.9 ..................................................................... Olsten 1.9 ..................................................................... General Nutrition 1.8 ..................................................................... Comcast 1.8 ..................................................................... Sanifill 1.7 - --------------------------------------------------------------------- MGIC Investment 1.7 ..................................................................... USA Waste Services 1.7 ..................................................................... Revco 1.7 ..................................................................... Vodafone 1.6 ..................................................................... Apria Healthcare 1.6 - --------------------------------------------------------------------- Home Depot 1.6 ..................................................................... PriceCostco 1.6 ..................................................................... Columbia/HCA Healthcare 1.6 ..................................................................... Republic Industries 1.6 ..................................................................... Quorum Health Group 1.6 - --------------------------------------------------------------------- Total 48.9%
5 T. Rowe Price New America Growth Fund - ---------------------------------------------------------------------
Portfolio Highlights - ----------------------------------------------------------------------------- CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE 6 Months Ended June 30, 1996 Ten Best Contributors Ten Worst Contributors - ----------------------------------------------------------------------------- HFS 69(cents) United HealthCare -28(cents) .................................... ...................................... Republic Industries * 30 Micro Warehouse 25 .................................... ...................................... Catalina Marketing 28 General Nutrition 21 .................................... ...................................... USA Waste Services 26 Viacom 14 .................................... ...................................... SunGard Data Systems 25 ADVO 14 .................................... ...................................... Sanifill 23 PacifiCare Health Systems 13 .................................... ...................................... ADT 23 Revco 12 .................................... ...................................... Paychex 21 Cellstar ** 11 .................................... ...................................... Cardinal Health 21 Mobile Telecommunication .................................... ...................................... PriceCostco 17 Technologies ** 5 - ------------------------------------ ...................................... Total 283(cents) Vencor * 4 -------------------------------------- Total -147(cents) 12 Months Ended June 30, 1996 Ten Best Contributors Ten Worst Contributors - ----------------------------------------------------------------------------- HFS 137(cents) Micro Warehouse -26(cents) .................................... ...................................... Paychex 44 Office Depot ** 19 .................................... ...................................... ADT 41 Mobile Telecommunication .................................... Catalina Marketing 38 Technologies ** 12 .................................... ...................................... America Online 37 Loewen Group ** 10 .................................... ...................................... Money Store 32 Browning-Ferris ** 8 .................................... ...................................... Tommy Hilfiger 31 Dollar General ** 8 .................................... ...................................... SunGard Data Systems 31 Viacom 7 .................................... ...................................... CUC International 30 Cellstar ** 7 .................................... ...................................... Republic Industries * 30 Vencor * 4 - ------------------------------------ ...................................... Total 451(cents) Scholastic * 2 -------------------------------------- Total -103(cents)
* Position added ** Position eliminated 6 T. Rowe Price New America Growth Fund - -------------------------------------------------------------------------------- Performance Comparison - -------------------------------------------------------------------------------- This chart shows the value of a hypothetical $10,000 investment in the fund over the past 10 fiscal year periods or since inception (for funds lacking 10-year records). The result is compared with a broad-based average or index. The index return does not reflect expenses, which have been deducted from the fund's return. [NEW AMERICA GROWTH FUND CHART APPEARS HERE] Average Annual Compound Total Return - -------------------------------------------------------------------------------- This table shows how the fund would have performed each year if its actual (or cumulative) returns for the periods shown had been earned at a constant rate. Periods Ended 6/30/96 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------- New America Growth Fund 38.11% 20.17% 20.35% 14.11% ...............................................................................
Investment return and principal value represent past performance and will vary. Shares may be worth more or less at redemption than at original purchase. 7 T. Rowe Price New America Growth Fund - -------------------------------------------------------------------------------- Unaudited FINANCIAL HIGHLIGHTS For a share outstanding throughout each period - --------------------------------------------------------------------------------
6 Months Year Ended Ended 6/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 NET ASSET VALUE Beginning of period $ 34.91 $ 25.42 $ 28.04 $ 24.86 $ 22.79 $ 14.66 .................................................................... Investment activities Net investment income 0.02 (0.12) (0.07) (0.08) (0.04) (0.02) .................................................................... Net realized and unrealized gain (loss) 5.05 11.36 (2.02) 4.39 2.29 9.02 .................................................................... Total from investment activities 5.07 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 $ 39.98 $ 34.91 $ 25.42 $ 28.04 $ 24.86 $ 22.79 -------------------------------------------------------------------- Ratios/Supplemental Data Total return 14.52% 44.31% (7.43)% 17.44% 9.89% 61.95% ................................................................................................. Ratio of expenses to average net assets 1.01%+ 1.07% 1.14% 1.23% 1.25% 1.25% ................................................................................................. Ratio of net investment income to average net assets 0.11%+ (0.46)% (0.27)% (0.39)% (0.44)% (0.12)% ................................................................................................. Portfolio turnover rate 34.7%+ 56.2% 31.0% 43.7% 26.4% 42.3% ................................................................................................. Average commission rate paid $ 0.0819 -- -- -- -- -- ................................................................................................. Net assets, end of period (in millions) $ 1,342 $ 1,028 $ 646 $ 619 $ 480 $ 232 .................................................................................................
+ Annualized. The accompanying notes are an integral part of these financial statements. 8 T. Rowe Price New America Growth Fund - ------------------------------------------------------------------------------- Unaudited June 30, 1996
Statement of Net Assets Shares/Par Value - ------------------------------------------------------------------------------- In thousands Common Stocks 97.1% FINANCIAL SERVICES 15.3% Bank and Trust 1.3% Norwest 500,000 $ 17,438 ................................................................................ 17,438 ............ Insurance 6.0% ACE Limited 575,000 27,025 ................................................................................ MGIC Investment 400,000 22,450 ................................................................................ PMI Group 325,000 13,812 ................................................................................ UNUM 275,000 17,119 ................................................................................ 80,406 ............. Investment Services 2.0% Franklin Resources 450,000 27,450 ................................................................................ 27,450 ............. Other Financial Services 6.0% ADVANTA (Class B) 48,100 2,195 ................................................................................ Fannie Mae 400,000 13,400 ................................................................................ Freddie Mac 175,000 14,962 ................................................................................ Green Tree Financial 500,000 15,625 ................................................................................ Household International 200,000 15,200 ................................................................................ Mercury Finance 700,000 8,925 ................................................................................ Money Store 475,000 10,420 ................................................................................ 80,727 ............. Total Financial Services 206,021 ............. CONSUMER SERVICES 33.1% Retailing/General Merchandisers 1.6% PriceCostco * 1,000,000 21,500 ................................................................................ 21,500 ............. Retailing/Specialty Merchandisers 12.7% AutoZone * 318,000 11,051 ................................................................................ Circuit City Stores 500,000 18,063 ................................................................................ Cole National (Class A) *+ 800,000 16,000 ................................................................................ Eckerd * 900,000 20,362 ................................................................................ General Nutrition * 1,400,000 24,412 ................................................................................ Home Depot 400,000 21,600 ................................................................................
9 T. Rowe Price New America Growth Fund - --------------------------------------------------------------------------------
Shares/Par Value - ------------------------------------------------------------------------------- In thousands Kohl's * 500,000 $ 18,312 ................................................................................ Revco * 930,000 22,204 ................................................................................ Tommy Hilfiger * 350,000 18,769 ................................................................................ 170,773 ............. Entertainment and Leisure 3.6% Disney 200,000 12,575 ................................................................................ La Quinta Inns 500,000 16,750 ................................................................................ Viacom (Class A) * 100,000 3,812 ................................................................................ Viacom (Class B) * 400,000 15,550 ................................................................................ 48,687 ............. Media/Communication Services 9.1% AirTouch Communications * 600,000 16,950 ................................................................................ America Online * 139,400 6,081 ................................................................................ Comcast (Class A Special) 906,300 16,653 ................................................................................ Comcast (Class A) 413,700 7,654 ................................................................................ Cox Communications (Class A) * 200,000 4,325 ................................................................................ Gaylord Entertainment 600,000 16,950 ................................................................................ Paging Network * 1,073,600 25,565 ................................................................................ PanAmSat * 200,000 5,775 ................................................................................ Vodafone ADR 600,000 22,125 ................................................................................ 122,078 .............. Restaurants/Food Distribution 2.6% Boston Chicken* 500,000 16,219 ................................................................................ Lone Star Steakhouse & Saloon * 200,000 7,538 ................................................................................ Outback Steakhouse * 300,000 10,312 ................................................................................ 34,069 .............. Personal Services 3.5% CUC International * 750,000 26,625 ................................................................................ Service Corp. 350,000 20,125 ................................................................................ 46,750 .............. Total Consumer Services 443,857 .............. BUSINESS SERVICES 48.2% Health Care Services 10.6% Apria Healthcare * 700,000 21,963 ................................................................................ Columbia/HCA Healthcare 400,000 21,350 ................................................................................ HealthSouth * 250,086 9,003 ................................................................................
10 T. Rowe Price New America Growth Fund - ----------------------------------------------------------------
Statement of Net Assets Shares/Par Value - ------------------------------------------------------------------------------- In Thousands PacifiCare Health Systems (Class B) * 225,000 $ 15,272 ................................................................................ Quorum Health Group * 800,000 21,100 ................................................................................ United HealthCare 775,000 39,137 ................................................................................ Vencor * 478,800 14,603 ................................................................................ 142,428 ............. Distribution Services 5.2% Airgas * 500,000 9,500 ................................................................................ Alco Standard 375,000 16,969 ................................................................................ Cardinal Health 375,000 27,047 ................................................................................ Patterson Dental * 450,000 16,200 ................................................................................ 69,716 ............. Computer Services 6.2% BISYS Group * 400,000 15,025 ................................................................................ Ceridian * 326,000 16,463 ................................................................................ First Data 317,180 25,256 ................................................................................ SunGard Data Systems * 660,000 26,441 ................................................................................ 83,185 .............. Environmental Services 4.9% Republic Industries * 513,000 14,973 ................................................................................ Republic Industries *# 212,000 6,188 ................................................................................ Sanifill * 458,900 22,601 ................................................................................ USA Waste Services * 750,000 22,219 ................................................................................ 65,981 ............. Energy Services 5.1% BJ Services * 400,000 14,050 ................................................................................ Camco International 350,000 11,856 ................................................................................ Schlumberger 225,000 18,956 ................................................................................ Smith International * 400,000 12,050 ................................................................................ Western Atlas * 200,000 11,650 ................................................................................ 68,562 ............. Other Business Services 16.2% ADT * 2,000,000 37,750 ................................................................................ ADVO 775,000 8,041 ................................................................................ Catalina Marketing * 300,000 27,450 ................................................................................ Corporate Express * 516,900 20,708 ................................................................................ Global DirectMail * 243,600 9,622 ................................................................................ HFS * 750,000 52,500 ................................................................................ Micro Warehouse * 345,000 6,814 ................................................................................
11 T. Rowe Price New America Growth Fund - ----------------------------------------------------------------
Statement of Net Assets Shares/Par Value - ------------------------------------------------------------------------------- In Thousands Olsten 850,000 $ 24,969 ................................................................................ Paychex 300,000 14,419 ................................................................................ Scholastic * 250,000 15,562 ................................................................................ 217,835 ............. Total Business Services 647,707 ............. Miscellaneous Common Stocks 0.5% 6,176 ............. Total Common Stocks (Cost $865,954) 1,303,761 ............. Short-Term Investments 2.9% Bank Notes 0.4% Bank of America, 5.02%, 7/16/96 $5,000,000 4,999 ................................................................................ 4,999 ............. Commercial Paper 2.5% Banque Nationale de Paris, 5.40%, 7/25/96 3,000,000 2,989 ................................................................................ BMW U.S. Capital, 5.39%, 8/12/96 3,000,000 2,981 ................................................................................ Den Danske, 5.38%, 8/12/96 3,000,000 2,981 ................................................................................ Great Lakes Chemical, 4(2), 5.35%, 7/11/96 1,000,000 998 ................................................................................ Investments in Commercial Paper through a joint account, 5.49 - 5.68%, 7/1/96 2,547,518 2,548 ................................................................................ Kredietbank N.A. Finance, 5.40%, 7/3/96 4,100,000 4,099 ................................................................................ Mobil Australia Finance, 4(2), 5.30%, 8/2/96 3,000,000 2,986 ................................................................................ National Rural Utilities Cooperative Finance, 5.40%, 7/11/96 2,500,000 2,496 ................................................................................ Preferred Receivables Funding 5.32%, 7/2 - 7/9/96 8,000,000 7,994 ........................................................................... 5.40%, 7/10/96 1,000,000 999 ........................................................................... Statoil (Den Norske Stats Oljeselskap), 5.37%, 7/22/96 3,000,000 2,991 ................................................................................ 34,062 ............. Total Short-Term Investments (Cost $39,061) 39,061
............. 12 T. Rowe Price New America Growth Fund - --------------------------------------------------------------------------------
Statement of Net Assets Shares/Par Value - ------------------------------------------------------------------------------- In thousands Total Investments in Securities 100.0% of Net Assets (Cost $905,015) $1,342,822 Other Assets Less Liabilities (502) ............. NET ASSETS $1,342,320 ------------- Net Assets Consist of: Accumulated net investment income - net of distributions $ 665 Accumulated net realized gain/loss - net of distributions 77,549 Net unrealized gain (loss) 437,807 Paid-in-capital applicable to 33,574,432 shares of no par value capital stock outstanding; unlimited number of shares authorized 826,299 ............. NET ASSETS $1,342,320 ------------- NET ASSET VALUE PER SHARE $ 39.98 ----------------
+ Affiliated company * Non-income producing # Securities contain some restrictions as to public resale--total of such securities at period-end amounts to 0.5% of net assets. 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. 13 T. Rowe Price New America Growth Fund - -------------------------------------------------------------------------------- Unaudited Statement of Operations - ------------------------------------------------------------------- In thousands
6 Months Ended 6/30/96 Investment Income Income Dividend $ 5,505 Interest 1,053 ........... Total income 6,558 ........... Expenses Investment management 3,986 Shareholder servicing 1,645 Custody and accounting 82 Registration 82 Prospectus and shareholder reports 59 Directors 12 Legal and audit 12 Miscellaneous 15 ........... Total expenses 5,893 ........... Net investment income 665 ........... Realized and Unrealized Gain (Loss) Net realized gain (loss) on securities 71,698 Change in net unrealized gain or loss on securities 82,949 ........... Net realized and unrealized gain (loss) 154,647 ........... INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 155,312 -----------
The accompanying notes are an integral part of these financial statements. 14 T. Rowe Price New America Growth Fund - ------------------------------------------------------------------------------- Unaudited
Statement of Changes in Net Assets - ------------------------------------------------------------------------------- In thousands 6 Months Year Ended Ended 6/30/96 12/31/95 Increase (Decrease) in Net Assets Operations Net investment income $ 665 $ (3,671) Net realized gain (loss) 71,698 58,011 Change in net unrealized gain or loss 82,949 236,779 ......................... Increase (decrease) in net assets from operations 155,312 291,119 ......................... Distributions to shareholders Net realized gain - (49,223) ......................... Capital share transactions * Shares sold 290,931 267,361 Distributions reinvested - 48,036 Shares redeemed (132,133) (175,229) ......................... Increase (decrease) in net assets from capital share transactions 158,798 140,168 ......................... Net Assets Increase (decrease) during period 314,110 382,064 Beginning of period 1,028,210 646,146 ......................... End of period $1,342,320 $1,028,210 ------------------------- * Share information Shares sold 7,666 8,445 Distributions reinvested - 1,396 Shares redeemed (3,548) (5,804) ......................... Increase (decrease) in shares outstanding 4,118 4,037
The accompanying notes are an integral part of these financial statements. 15 T. Rowe Price New America Growth Fund - -------------------------------------------------------------------------------- Unaudited June 30, 1996 Notes to Financial Statements - -------------------------------------------------------------------------------- NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES T. Rowe Price New America Growth, Inc. (the fund) is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company and commenced operations on September 30, 1985. 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. Other equity securities are valued at a price within the limits of the latest bid and asked prices deemed by the Board of Trustees, or by persons delegated by the Trustees, best to reflect fair value. 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. 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. 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. 16 T. Rowe Price New America Growth Fund - -------------------------------------------------------------------------------- NOTE 2 - INVESTMENT TRANSACTIONS 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. Other Purchases and sales of portfolio securities, other than short-term securities, aggregated $344,498,000 and $198,162,000, respectively, for the six months ended June 30, 1996. 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, 1996, the aggregate cost of investments for federal income tax and financial reporting purposes was $905,015,000, and net unrealized gain aggregated $437,807,000, of which 447,488,000 related to appreciated investments and $9,681,000 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 $738,000 was payable at June 30, 1996. 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 0.305% for assets in excess of $50 billion. At June 30, 1996, and for the six months then ended, the effective annual group fee rate was 0.33% and 0.34%, respectively. The fund pays a pro rata share of the group fee based on the ratio of its net assets to those of the group. 17 T. Rowe Price New America Growth Fund - -------------------------------------------------------------------------------- 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 $1,468,000 for the six months ended June 30, 1996, of which $186,000 was payable at period-end. 18 T. Rowe Price 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 Monday through Friday from 8 a.m. to 10 p.m. ET and weekends from 8:30 a.m. to 5 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. You can also drop off applications or obtain prospectuses and other literature. Automated 24-Hour Services Tele*Access/(R)/ Call 1-800-638-2587 to obtain information such as account balance, date and amount of your last transaction, latest dividend payment, and fund prices and yields. Additionally, you can request prospectuses, statements, new account and tax forms; reorder checks; and initiate purchase, redemption, and exchange orders for identically registered accounts. T. Rowe Price OnLine Through a personal computer via dial-up modem, you can replicate all the services available on Tele*Access. Account Services Checking Write checks for $500 or more on any money market and most bond fund accounts (except the High Yield and Emerging Markets Bond Funds). 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 move investments systematically from one fund account to another, such as from a money fund to a stock fund. A low $50 minimum makes it easy to get started. 19 T. Rowe Price Shareholder Services - -------------------------------------------------------------------------------- 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. Discount Brokerage* Investments Available You can trade stocks, bonds, options, precious metals, and other securities at a savings over regular commission rates. To Open an Account Call a shareholder service representative at 1-800-225-5132. Investment Information Combined Statement A comprehensive overview of your T. Rowe Price accounts is provided. The summary page gives you 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 This is a quarterly newsletter with relevant articles on market trends, personal financial planning, and T. Rowe Price's economic perspective. Performance Update This quarterly report reviews recent market developments and provides comprehensive performance information for each T. Rowe Price fund. Insights This library of information includes reports on mutual fund tax issues, investment strategies, and financial markets. Detailed Investment Guides Our widely acclaimed Asset Mix Worksheet, College Planning Kit, Personal Strategy Planner, Retirees Financial Guide, and Retirement Planning Kit (also available on disk for PC use) help you determine and reach your investment goals. * T. Rowe Price Discount Brokerage is a division of T. Rowe Price Investment Services, Inc. Member NASD/SIPC. 20 T. Rowe Price Mutual Funds - -------------------------------------------------------------------------------- STOCK FUNDS BOND FUNDS International/Global ...................... ...................... Emerging Markets Bond Domestic Domestic Taxable Global Government Bond Balanced Corporate Income International Bond Blue Chip Growth GNMA Short-Term Global Income Capital Appreciation High Yield Capital Opportunity New Income Money Market ...................... Dividend Growth Short-Term Bond Taxable Equity Income Short-Term U.S. Government Prime Reserve Equity Index Spectrum Income Summit Cash Reserves Growth & Income Summit GNMA U.S. Treasury Money Growth Stock Summit Limited-Term Bond Tax-Free Health Sciences U.S. Treasury Intermediate California Tax-Free Money Mid-Cap Growth U.S. Treasury Long-Term New York Tax-Free Money Mid-Cap Value Domestic Tax-Free Summit Municipal New America Growth Money Market New Era California Tax-Free Bond Tax-Exempt Money New Horizons* Florida Insured Intermediate Tax-Free Blended Asset OTC ...................... Georgia Tax-Free Bond Science & Technology Personal Strategy Balanced Maryland Short-Term Small-Cap Value* Tax-Free Bond Personal Strategy Growth Spectrum Growth Maryland Tax-Free Bond Personal Strategy Income Value New Jersey Tax-Free Bond T. Rowe Price No-Load New York Tax-Free Bond Variable Annuity International/Global ...................... Summit Municipal Income Equity Income Portfolio Emerging Markets Stock Summit Municipal Intermediate International Stock Portfolio European Stock Tax-Free High Yield Limited-Term Bond Portfolio Global Stock Tax-Free Income New America Growth Portfolio International Discovery Tax-Free Insured Personal Strategy Balanced International Stock Intermediate Bond Portfolio Japan Tax-Free Short-Intermediate Latin America Virginia Short-Term Tax-Free Bond New Asia Virginia Tax-Free Bond
*Closed to new investors. 21 For yield, price, last transaction, and current balance, 24 hours, 7 days a week, call: 1-800-638-2587 toll free 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)/. [LOGO OF T.ROWE PRICE APPEARS HERE] T. Rowe Price Investment Services, Inc., Distributor -----END PRIVACY-ENHANCED MESSAGE-----